You are absolutely right, it shouldn't be this way.OK. Good for y'all. But please explain to me what the penalty is aside from they cannot be banked. There is supposed to be a penalty associated with the points once that <30 day reservation is canceled. Maybe the online system is broken. Big surprise. Well good for us until it's fixed, if it ever is, I guess.
The question on the table was is it allowed and the answer is that it is not by rule.
It is a bug of the online system and it works, until it doesn't. It might get fixed at any time and without any notice, so I warn anyone of being too relaxed about having point on holding because of this bug. But until it works, I cannot blame people for using it.