The "upgrade for a fee" option doesn't seem to care about one's upgrade request, status, or even whether one is flying on a revenue ticket or an award ticket. It's simply a "revenue enhancer" for UA. Why hand out (nearly) free upgrades to those using e500s when they can charge money for the same seats?
My concern is upgrade priority after July 1 when at least a small number of non-elites or elites flying on cheap fares will opt for the co-pay plus miles option to upgrade. My gut feeling is that pax with status flying on more expensive fares such as Y or B may have the lowest priority since UA won't charge them a co-pay.