If the extra mileage was charged, then they should find them seats somewhere, somehow. If not, then you're right, it was an error, and they didn't pony up the miles.

I often get awards that have 6 or 7 segments, one or two of which are in coach. Sometimes these get upgraded, if they're an EUAble route. I think just a day or two before the flight, though. Of course with mean DL coming on the scene, who knows what next year will be like.