The answer to this question may seem obvious, but I'm not on the test server to check it out. Since the consequences of answering it incorrectly would be dire, please humor me.
The part of the mythic equipment blog page dealing with the auto-select contains the following: "Note that if there is extra material over the material requirement for leveling up, it will be lost." I assume that means that, if a piece of legendary equipment (worth 4 pts) is auto-selected when the item being upgraded only needs 1 pt, the remaining 3 pts are lost. I assume that it does not mean that, if your inventory contains 500 total items but the item being upgraded only needs 2 items, you lose 498 items.
Can someone on the test server (or who knows the answer) please confirm? TIA.