Frankly, this seems pretty cut and dried to me. Since you have a 5-night long reservation, I think it's reasonable for the resort to expect you to stay for 5 nights. If you fail to live up to the terms of your reservation, you should expect to have to pay the "penalty", whatever that is according to your reservation.

Consider the following: For whatever reason, this property has decided that it needs to have a cancellation policy of 3-days. This means that, 1) guests often check out early, or, 2) during this time frame, they anticipate guests might check out early. Hotels/resorts are, after all, a for-profit business. There's a good chance that if they have such a policy, they are probably turning away guests that might have booked with them on the days you want to have "on hold".

You have a 5-night reservation. How angry would you be if they told you after that 3rd night that you had to leave because they didn't want to honor their agreement to give you lodging for 5 nights?