Based on my experience with Lufthansa (where this is implemented but not publicised) then I was a senator card holder for a while before I even knew this existed and only when subscribing to expert flyer did I understand what they were doing. At first I thought the check in agent did the blocking when I checked in, but eventually realised the system did it sometime before online checkin started. If you change your seat later then the block is re-applied (if the next seat is free).

Implementation wise the middle seat is only blocked if it's empty, so of course nobody is moved (if you change seats/flight). There is no noticeable order of "unblocking". The check in staff can easily override it and perhaps if asked by a couple then they will. I have had someone sit next to me plenty of times on LH with other empty non-blocked middle seats available, so there is no complicated unblocking system for the agents to follow.

On lufthansa in europe (about 40 flights/year) i've never seen people reseat themselves next to somebody, only take aisle or (rarely) window seats still leaving an empty seat in the middle.

Long haul LH still give all economy passengers advance seat assignment. This is perhaps the reason they don't do any family seat allocations at T-3 days. And for short haul everyone (apart from status card holders) must wait until online check in to get a seat allocation and there is no allocation of families at T-3 there either.