CX, as a profit seeking company, sees empty seats as lost revenue. Will bidding devalue J? I really don't think CX cares, they want to max revenue, not to make F/J class pax feel they are "exclusive", I think we can safely assumed that they are not SQ by now.
Also, I don't think paid-J flyers will risk flying in Y+ and go the bidding route and potentially risk not getting a J seat and have to settled for Y+; when they can comfortably guaranteed a J seat by paying for it up front. The perspective is that this is "not fair", but this has been the rule of flying forever. Airlines adjusts their prices based on demand, and if there are plenty of seats left prior to departure date they will lower these seats prices, I don't see the airlines doing anything different then what they have been doing all along, they simply made it simpler to grab empty seats in the last minute. In any given class you will have people paying from the range of 100% full fare to as low as 50% of full fare. This has not "cheapen" the classes flown before. So why does making it easier for people to access price differentiation all of a sudden "cheapen" the airlines when they have been doing it forever?
As to answer the OP:
Yes, I believe priority should be given to status ladder that CX has: DM - GO - SL - GR - AM
There should also be a "Cash and miles" option, similar to what SPG has for their program. A pax can pay a mixture of cash and miles. For example: an option of either paying extra $1500 USD for one sector upgrade to J, or a mixture of $500 USD plus 30,000 miles for one sector upgrade to J. Just an idea.