Which still leaves a lot of room for speculation - but it suggests, to my mind, that the pilot was not originally on the flight at all. Since the GA had already said that J was full (and what reason would they have for lying about this ?) before the pilot shewed up, the scenario then becomes :

1. J cabin on the flight is full with revenue J pax and previously confirmed upgrades ;
2. Thus no further upgrades can be accommodated, and you are stuck in Y ;
3. Deadheading pilot shews up asking to be put on the flight ;
4. Since pilots have to be in J as per the collective agreement, the pilot gets put in the already full J cabin and one of the passengers who already has a J BP (either revenue J or upgrade) has to be bumped back to Y or off the flight altogether.

Assuming this is the correct interpretation, incidents 1-2 have nothing to do with 3-4 and the pilot was not the 'cause' of you not getting the upgrade.

I understand it adds a lot to the annoyance of the situation to see the airline bend over backwards to accommodate an employee when they couldn't do it for you, but you couldn't reasonably expect them to bump another paying pax out of J so that you could get your upgrade (assuming the J cabin was in fact full). The fact that they have to bump people out for deadheading pilots is something that many people here disapprove of (certainly it is terrible PR), but it's strictly tangential to your experience, which seems to be that you didn't get an upgrade because there was no room left for upgrades to begin with.

Having said that, it can't hurt to let AC know how irritated you evidently were by this episode.