I took advantage of this a couple nights ago, and it worked perfectly. I managed to get the amount to $30 exactly since I didn't want any odd number of Microsoft Points, but as it would turn out, that's not really how it works. Basically, however much change you put in, you get an e-certificate worth that much towards whatever you chose. Once you enter the PIN and code on the website, it takes you to a site where you can choose what you want to redeem your credit on. Then you get to choose how much you want to spend on your membership or Microsoft Points in predetermined increments (I'm not sure about months, but MSP go in increments of $5/400 MSP), and once you spent the amount you wanted, you finalize the payment and it gives you a code to enter on Xbox's website. So don't worry about getting exactly $30 if you're OCD about points like me - just know that you probably won't be able to spend any of the extra change you end up with.
As for the bonus $10, that prints on the bottom of the "receipt," and it works exactly like the credit you get for your change. So make sure you don't toss it before you redeem that too, because it doesn't come included in the other code. :P
So if you go over their predetermined increments, do you just have left over money you can't use until you enter more money to hit the next level increment?
So if you cashed in $30.50 you would have 50 cents sitting there until you enter more to get to $5?