That is very much a possibility - just booking the ex-AMS trip (commercial fare, no MFU) will always issue the ticket in the Netherlands. However when doing 'book & upgrade' the ticket will be issued in the country of BAEC membership.

However in this case I'm guessing that the system simply is giving you the fully-flexible fare due to an internal problem. It was known to sometimes do that for slightly more complex routings.

BTW: I recently booked a regular ex-AMS ticket by calling BA UK - the ticket is issued in the UK, charged in GBP, and the UK-POS fuel surcharge is charged (which is quite a bit less than the NL-POS fuel surcharge). Apart from that everything is the same. So you'll be virtually guaranteed to be able to book&upgrade this ticket for the lower price by calling BAEC UK.