You heard it correctly. You may only upgrade on AA operated flights on AA metal using VIPOW's; ergo, you simply cannot do it with VIPOW's on AA. You do have, however, the following option:

1. Fly LAX-SJC-NRT on AA and upgraded with VIPOW's RT. Buy a pair of JL J tickets NRT-CAN.

2. Swap your VIPOW's with 2 new style UA SWU's and fly LAX-SFO-HKG upgraded to C. Buy a pair of Y tickets on CZ (or equivalent) HKG-CAN.

Currently, there's just no way of going to Asia beyond NRT on AA. This is one of my biggest gripes with AA. Certainly UA (and the Star) offers much more options flying into China, at least PVG and PEK. Oneworld really lacks presence in China, unfortunately.