If that's true, why when I travel with a non-elite companion, does it (a) allow me to sit us as far apart as I like, but still both in separate elite seats and (b) when we get upgraded, it frequently sits us apart even when two seats are available together!

The argument about how upset you may be as an elite if you book late and find out all the best seats are taken by elite companions and not elites themselves is very weak - if the upgrade request was never made then there would actually be two less seats elite seats left in the back instead of one, which I'm sure happens all the time. Next it'll be EXPs complaining than GLDs are taking all the elite seats because they booked earlier and that's not fair either.