I think I've figured out a possible (but not ideal) workaround for one issue. I don't know if anyone else has noticed this, but if you try to book more than one night with points, it displays the full points price. If you still try to reserve, it errors out. But, if you book each night separately, it displays the promotion points amount and you can proceed to the booking page.
Not all hotels seem to have this problem. I tried about two dozen hotels in different cities over different dates and only two were bookable at the reduced points level for more than a one-night stay.
Obviously, this doesn't address the issue of points not being refunded when canceling an award reservation...
but at least it's something. Also, you have the added hassle of notifying the hotel about your multiple reservations.