Would love to see a couple of additional options in the rewards program settings.
First, instead of just allowing "buy a certain number get something free" you should also have a couple of other options. These would be buy a certain product or amount and get a % discount off your order and also a bank account type of reward. This would allow you to earn points/dollars based on your purchases (similar to a gift certificate) that you can apply to future orders.
Second, a reward type of program that allows you to get a percent discount automatically from your order if you are logged in on non-sale merchandise only. Please also see my coupon suggestion with a similar request.