Coke,
She was 100% correct. Upgrades are earned for use by the named individuals when upgraded, not to then be given to others. One could sponsor an other person with miles or certs, and then when they clear, they will be given the seats in F and have their names listed on the manifest. Just as President Obama can't give away his title to a friend, neither can someone give away their F seat. Both are earned for individual use by the named person based on their status/accomplishments. Of course in Cuba or North Korea, one can give away the title to anyone, but UA isn't like that.

The concept may seem weird and one can debate whose seat it is and what one can do with it once one's name is on it, but the fact is, she was 100% correct in her interpretation.

Just as many GA may not enforce boarding order because the arguments would be endless with the zone jumpers, not all flight attendants will argue the correctness of who gets to sit in the seat. Many many not even notice, and if they do, they let it go as they don't want the conflict. By turning 1 person into 2 in F on this flight, you made it impossible for her not to notice. She choose not to look the other way and discuss the situation.