When we first bought into DVC, we were staying at the BWI on an AP rate of $169/night (plus tax), so that's what we compared dvc costs to, not rack rate since we knew we wouldn't likely be paying rack rate to stay at a deluxe.
When we first bought in, we bought 170 points. We did the Magical Beginnings thing when it was still $10/point for the full alottment of the points which brought our cost down to $55/point. 6 months later, we got another 170 points and booked a studio for a week at the boardwalk the next January using 85 points. If we had been less timid about our trips to WDW, we could've booked 2 full weeks with our 170 points.
We did the math for this scenario before we even bought in. The AP rate for 7 nights ran us about $1300. We financed our DVC over 10 years and yearly we pay around $1900 for both the loan and dues (with about 2/3 of that being the loan and 1/3 of that being the dues). The 170 DVC points can buy us 2 full weeks of accomodations in January for that $1900/year. Even comparing to AP rates, we are still spending $700 LESS than we'd be paying if we paid cash for a BWI room ($2600). AND the next year we have something to show for what we spent.
Of course that's comparing the low season... If you take the numbers for Magic season (during most of which you don't generally see AP rates anyway, but just for the sake of argument) We can have 12 nights in a boardwalk studio (cutting off a saturday and sunday night, which we do for long trips even when paying cash because it gives us a weekend to "recover" from the excitement of a trip) for 138 points. The pro-rated portion of what we pay yearly for those 138 points is $1550. Paying that $169/night AP rate would cost me $2250 for the same number of days. Again, a $700 savings. AND we have something to show for the money that we spent (one year closer to that 10 year loan being paid off!)
We know we'd spend the money on accomodations ANYWAY, so why not spend LESS money than we would even for AP rates AND have something to show for it.
The real fun begins in 10 years when our loan is paid off... paid off by money we would've spent on vacations anyway, only if we went with AP rates, we'd have nothing to show for it. Now there is a $299 (with tax) AP rate on a 2 BR at OKW. For 7 days you are paying $2100 for that 2 bedroom. Great deal you say, why do I need DVC? Well, now that you have paid off DVC, your cost for the same week in an OKW 2 br is $1050! That's a $1000 savings! No AP rate is going to beat that savings... that's around 75% off the rack rate!
For our typical vacationing patterns, these numbers really work out neatly. I realize that to finance and pay the dues on the number of points you'd need for a 2br at OKW during this season, you'd probably pay more like $3600/year for 300 points (rounding very liberally and rounding up). So yes, that's $1500 more THIS YEAR, but what do you have to show for your savings at the end of the year? You've taken your vacation, you've spent your money and now it's gone. At least when DVC, 2/3 of what you are paying is going toward something that will give you many many more years of pleasure... and there is always the joy of paying off DVC and only having to pay dues for rooms. The numbers I quoted are kind of a worst case scenario based on financing for as long as possible.
Don't forget those years when there ARE no AP discounts. I remember clearly during the millennium celebration all of the hysteria on the budget board here because NO AP rates were released. People talked about how awful and cheap Disney was for not releasing AP rates... but the truth was, they didn't need to because the place was booked SOLID. Some were released during the year, but they were few and far between and if you didn't call right away, you lost out. I just chuckled to myself and patted myself on the back for buying into DVC when I did.
Those years you won't find an OKW 2 bedroom for $269... Then you are faced with the choice of paying $520/night (with tax over $4000 for a week in an OKW 2 bedroom) or not going to Disney at all. Meanwhile, all of the people who bought into DVC will be enjoying the rooms that they are paying $1050 for (the ones who paid off their initial DVC purchase at least!). For your $269 you could always get a couple of rooms at a moderate though, but forget the kitchen, diningroom, washer and dryer and jacuzzi for two.
Last, but not least, let's not forget the trend of Disney's prices... I believe I read somewhere that hotel prices have been raising at the rate of around 7-9% per year. Dues have averaged around a 3% increase, with the last couple of years seeing a DECREASE.
I honestly don't think that people who bought into DVC 10 years ago are going "darn, those $269 rates at OKW are awesome, why did I buy into DVC?" but rather "Wow, DVC paid for itself years ago and now I am paying around half of even the highly discounted AP rates!" DVC is not about seeing a savings right this very second (although in our case, we do!). It's about doing something smart for yourself now so that later you can congratulate yourself on what a great move it was to buy into DVC.
Lisa
thank god we had already bought. Don't tell your DH that 
