For hypothetical purposes:

There are 10 F seats on the plane, none of them were booked.

There are only 4 FO or higher PAX on the flight.

Do the other 6 simply go out empty? Does DL have a system of awarding the remaining seats to "regular" SM members based on their MQM's for the year? Or does DL just sell them?

I don't think I've ever seen it happen on the flights I travel. Usually enough FO's to upgrade.