In this case you've identified a particularly bad deal for the miles+copay upgrade, yes. You've also identified that UA deliberately publishes expensive one-way fares in some markets to try to capture revenue from certain kinds of travelers — I bet EWR-HNL has better round trips priced well below $1270!
In some cases the miles+copay option can make a lot of sense. For example, if you're flying East Coast to Asia you can either book an award ticket, or you can upgrade with miles+copay for practically the same price in miles/cash — but the difference is that the upgraded revenue flight *also earns miles*, while the award ticket doesn't earn miles.