I don't know what the best-possible-case outcome is (i.e. whether getting the upgrade refunded plus IDB compensation is possible).

If your friend would be happy just getting the upgrade money back, I think there's a decent shot of that by writing to EK and asking for that, in exchange for waiving any rights under EU 261/2004.

I was on a intra-EU flight on EK that went mechanical (after over three hours of delays), and the only option they gave was putting me on the same flight the following day. I wrote a lengthy letter afterwards, quoting various EU court decisions, and got a check for $600. It's definitely worth trying.