I actually saw this same thing happen a few weeks ago ONT-IAH. The GA would not allow the swap and everyone ended up having to swap seats back. It was a mess. Yes, another Elite got upgraded (and then complained when there was no room for their bag up front), and no, the person didn't get their seat back. They ended up swapping seats with the original person who took the first class seat. It was a middle seat for a middle seat, so it was an even trade, but could have been much easier for all involved.