Will terrible things happen if I replace part or all of the refined sugar in this recipe with malt extract?
I don't know about the substitution of dry malt extract for refined sugar. I know that measure for measure they have very different apparent sweetness, protein content, etc...

You said you have two possible alternate recipes for nougat, one using malted milk powder and one using liquid malt extract. You should be able to manufacture either of those products using dry malt extract.


Malted milk powder is essentially milk powder, with dry malt extract and flour added. I don't know the ratios for these ingredients, but they are all readily available at the store.
Liquid malt extract and dry malt extract are very nearly the same thing, just in different forms. You should be able to add water to your dry malt extract to create malt syrup to then substitute in the recipe. See ratios from this link. https://homebrew.stackexchange.com/questions/1348/what-is-the-conversion-rate-between-dry-malt-extract-dme-and-liquid-malt-extra