Yes you have misunderstood. Generally speaking from Sunday to Thursday you are better off using points than $ to book your rooms. For Fri and Sat though, you are better off using $ than points. If you look at a 2-bed villa at OKW in Adventure Season for example, it costs 22 points per night to hire Sun to Thurs, but for Fri and Sat it increases to 54 points per night. The cash $ price for staying does not increase for Fri and Sat. Lets assume its $350 per night for the sake of argument. Assume each point is worth $10 which you could rent it for. At 22 points per night for Sun to Thurs its obviously better to use points - 22 x $10 = $220 per night is less than $350 cash price. For Fri and Sat, however, the situation is reversed, cash price of $350 is less than the points price - 54 x $10 = $540 per night. You have to add tax on and resort tax to the cash price but you will still save if you make a cash booking rather than a points booking for those nights.
Obviously if you opt to move to another hotel for those nights you could save more - the above only works if you want to stay in the DVC accomodation. You can get your points and cash bookings linked, so you do not physically change villas.
Finally you could of course use it as an opportunity to debunk to a Universal resort hotel for the Fri and Sat night and get the benefit of FOTL there.
From my previous experience, I was told that my DVC rate (which was I think 25% off the rack rate) was the best discount available and I couldn't save as much applying any AP rates, but it is always worth checking to be sure.
