In my experience, you can request an upgrade when you book and it will clear (if space is available) even if you don't have the required stickers. Telephone check-in won't allow you to proceed, but the agents at the airport will process your sticker purchase at the counter. There doesn't seem to be a way that you can get a boarding pass without having the requisite number of upgrades in your account (ie. it isn't like the VIPOW stories of the agents not collecting paper coupons).
I don't know how it works if you want to buy upgrade stickers with miles, rather than buy them at $50 each. Does anyone know?