What I've heard from others I consider more knowledgable (although not from anyone who actually works for an airline) is that the airline which owns the miles pays the airline that owns the seat some marginal cost that pretty much just covers the food, drinks, baggage, and service. Think somewhere in the range of $50-100 for a first-class international ticket.

The seat itself is almost free. Remember, the point of a frequent flyer program is to take a wasted asset (unsold seats) and turn it into something valuable (a potential prize for loyal customers). Most airlines won't put seats into the award inventory unless they are already pretty sure it will go unsold. Since they assume it has no value, there's no reason for the partner to pay them for it either.