Just looked up your pass, no need to get the accommodation pass unless you want to. You just need to let the driver know when to pick you up. The 14 days is the minimum required time, but you can take as long as long as you like. I pre-booked all my accommodation before I left Australia - I'm a YHA member and stayed with them mostly.
When you first get on the bus to start your trip, the driver hands out copies of "The Bible" - the Magic handbook which is a guide about NZ, Magic, the stops, hostels, sights etc. Magic travellers receive discounts at certain places.
When you get on the bus, the driver sends around a list, and if you need accommodation select which hostel you'd prefer, how many nights etc, and at the first stop driver makes the bookings. They also send a list of activities if you choose to do any of all put your name down.
In Paihia I stayed at YHA Paihia- very clean, excellent staff and a great outdoor undercover garden. Good kitchen facilities too. Pipi Patch is more of a party hostel and just down the road. They have barbies and for around $7 or $10 you pick up a ticket from the YHA and you can attend. The first drink is free and is included in the price. I only had the one drink. Saves money that way.
You need at least two nights there. The Cape Brett Hole in the Rock cruise is great, but don't go with Kings which is the one Magic go with. I chose Fullers because their cruise is an hour longer and they do a one hour stopover at Urupukapuka Island, which is absolutely beautiful. the Maori carvings on the archways on the pier are wonderful. Good fish'n'chips there too.
In Rotorua I stayed at Cactus Jack's - it wasn't flash but the atmosphere was great and I really loved the place - warm and friendly and you can do your own thing.
Taupo left me unimpressed, I stayed only one night there. Wellington stay two nights at least.
Gotta go to work now.
Kia Ora.