The rules are unchanged, and unless you expected the upgrade (which I'm sure you didn't expect it, but merely thought that you'd get it due to the number of seats still open), you aren't misunderstanding anything.

CO routinely holds that many seats back until the day of the flight. It seems ridiculous to me too. Even as a Plat, and I was Gold last year, I'll find myself on gate standby before clearing the upgrade (if it clears). Strangely, even with a cabin that open 3 days out, you will see every seat in the F cabin filled when you board. (Hopefully you'll be in one of them!)

If you haven't checked out pda.continental.com, you might want to do so - you'll see realtime flight info, including upgrade lists (where you can find your place in the upgrade queue), flight standby lists, realtime seat maps, and more.

Good luck!