Steved,
Let me preface my comments with the disclaimer that I don't have any "inside" information on this subject, but have just been making observations.
To answer your specific question "Can a store drop inventory updates if their bottle count is low enough?" I believe the answer is No. Rather, I think the opposite happens: the PLCB will drop the item # from their computers when inventory gets low and they don't intend to reorder, even though a small amount of inventory may still exist in stores.
A current example of that is Bodega Norton Malbec Barrel Select 2006, which was PLCB code 28895. If you search for this product either by name or code # on the main PLCB search page you will come up empty. This is/was a Premium Power Purchase that we are tracking here:
http://www.pawinetalk.com/detail/?code=28895&mkt_category=4
From this PAWineTalk detail page, click on the "In Wine and Spirits Stores" link and you will get the PLCB product catalog page which currently shows:
* Code: 28895
* Description: Item not available
* Size:
* Price: $0.00
However if you then click on "Submit" in the search box (leave all "Address Categories" set to their defaults) Presto you will see that there is stock of this item in several stores. Incidentally, if you get your hands on such a bottle and try to buy it you may have a tough time checking out since the store register may not bring up a price. This could be your chance to negotiate your price!
Good luck!