Line 10.5x15 inch baking dish with parchment paper or aluminum foil. Lightly butter parchment/foil.
Remove 2 1/2 cups marshmallows from bag and set aside for middle layer.
Melt 1/3 cup butter and marshmallows over low heat in large pot.
Meanwhile, melt caramel, sweetened condensed milk and 1 stick of butter (1/2 cup) in microwavable bowl in microwave until completely melted, stirring often.
Once butter and marshmallow mixture is melted, gently stir in cereal until well combined.
Spread half of cereal mixture evenly into baking dish, pressing down.
Sprinkle 2 1/2 cups marshmallows over top.
Pour melted caramel mixture over top of marshmallows.
Carefully add remaining cereal mixture over top of caramel for top layer, gently pressing down.
Cool completely.
Use foil/parchment paper to remove from pan. Cut into squares (7 down and 5 across) and store in airtight container.