It's very frustrating, especially since they keep offering me a cash room every time I call. Just give me one of those, I have no problem staying in a non-DVC designated room...
Cash rooms are either supported by unsold points (Disney owns the points and can use the rooms however they wish) or they're the net result of a member trading the points for some non-DVC destination. It's not often one hears of a room being pulled back into the DVC inventory. Disney is willing to roll the dice and bet that someone will book it on short notice. They can offer promo price or even offer the room as a complimentary upgrade to cash guests.
If Disney routinely allowed those cash rooms to be pulled back, they would lose out on some amount of late-notice revenue and eventually DVC would "owe" them more and more villa inventory. Disney knows that it won't rent every villa given to CRO but that's factored into pricing.