I so no ethical shaky ground. I am assuming the OP has a travel policy that entitles him to fly first/bus on flights over a certain distance, but if he is willing to forgo that entitled seat for one in coach, he gets a bonus. If he books a coach ticket and upgrades with his own points, I think it is fine.
He is on the same moral ground as I am.

I fly only domestically, and am never allowed to book anything other than coach, if I book a higher fare to get myself on the upgrade list, then we have an ethical breach.

There is no issue with me using miles or being automatically upgraded (depending on if I am flying AA or CO).

I think the OP is ethically correct as long as he buys the cheapest applicable coach seat.