As far as I know there is no "new policy" to only upgrade people to the next higher category. In fact, the policy has gone in the opposite direction, with language now explicitly allowing for upgrades to suites, particularly in Asia, but even at the rest of Marriott properties.
It seems pretty clear to me that the property the OP went to is simply a stingy property that doesn't deserve Marriott elites' business, but that is not indicative of a larger trend in Marriott.
Of course as others alluded to, for the best lounges, go to Asian Marriotts!!!