Why is using a potentimeter as a rheostat treated different way than a resistor?
If the 10k pot is rated at 500 mW then each 10 ohm section can only be rated at 0.5 mW. If you are only using a 10 ohm section then the current that can be put through that section is \$\sqrt{0.5 \space \text mW\text /10}\space \$  or 7.071 mA.

What if you used a 20 ohm section - the allowable power is 1mW and the allowable current is 7.07 mA. A 100 ohm section can dissipate  5 mW and the allowable current is therefore still 7.071 mA.