As I understand it the tickets are not standby (the Ts'n'Cs mention 'bookable')... but are confirmed (KK on the old paper ticket) and take one of the inventory of seats allocated to the flight. It is only in the situation that the flight is oversold and too many passengers show up that the person would be denied boarding.

But then this can also happen to revenue passengers. But yes, with a freebie you are at the top of the list.

This is the same policy as Cathay Pacific and American Airlines have on their 'free' prize winner tickets.

For this reason there will often be 'embargoed' dates when the tickets cannot be used, and they will be booked into the lowest sub class available (usually a specific staff travel subclass). It's therefore likely that if you can find availability for these tickets then it will be at a time when the flight will not be oversold.

I certainly do know that at Cathay and American there have been situations where prize winners have been offloaded. In both cases no compensation was paid but hotels and meals were provided.

Of course in the event of 'operational difficulties' things can go very pear shaped for such prize winners.