I don't know how it's supposed to work, but here's my experience in a similar situation (with a twist):
The four of us were scheduled out around 2 pm to connect at IAD for FCO, and there was plenty of snow at ORD all day. We decided to try the 8 am ORD-IAD which had a ton of standbys already due to cancellations. The agent put us at the top of the list and ultimately offered us two seats. My wife and one child (both GM's) took the offer, while two of us stayed back to try for the 9 am. I was able to use my status to snag the only two seats on the 9 am, again leaving dozens of standby travelers behind. I imagine that had we reversed the order my wife would've sunk to the bottom of the list for the 9 am.