1Grease 13x9-inch pan with butter. Measure cereal into large bowl.
2Reserve 1 cup of the marshmallows. In 3-quart saucepan, heat remaining 4 1/2 cups marshmallows, the chocolate chips, butter, sugar and water over low heat, stirring occasionally, until completely melted. Remove from heat; stir in vanilla. Pour marshmallow mixture over cereal in bowl; stir until evenly coated. Stir in remaining 1 cup marshmallows.
3Press firmly in pan. Cool at least 1 hour until firm. For bars, cut into 6 rows by 4 rows. Store loosely covered at room temperature.