I wonder if something screwy was up because the mile upgrades cleared first on the intl segments, so its not like additional miles were being pulled... except for the GM on the Q. This would be, I believe, the first report we've ever heard of a mile upgrade getting priority over medallion upgrade at the gate, and especially on the premium JFK-LAX route.
I'm sure DL doesn't intend to allow pax to buy a $650 K fare and use 12.5k miles to essentially secure a 2.5k+ J seat for those routes.
In my opinion, the GM on the Q+miles shouldn't have gotten the priority.
However, I'd argue that since others on the M fares (presumably) cleared the tatl segments, they should be eligible for mileage upgrades on the domestic legs since the miles were already deducted for the expensive intl fare.