My assumption is by CR1 you mean an upgrade instrument (either a GPU or RPU?)

If so you are mostly correct.... if the upgrade doesnt clear the instrument will be returned to your account.

In theory you are correct that you would be on the upgrade wait list without the instrument and when the upgrade clears you the instrument will be consumed. However using the instrument places you above all other CPUS (regardless of flyer status) so a Platinums RPU will clear before a 1K CPU no matter your fare class. Often using the instrument is the only way you will clear the wait list.

If you feel like there are enough open seats that you would clear a CPU you can always call and have them pull the instrument out before it clears and take your chances with the CPU.

Instrument upgrades are not seen the same as cash upgrades - this is a subject of contention but for the sake of this thread lets just accept the reality for now. Generally speaking Instruments are good for increasing your upgrade chances on high elite flights where your status or fare puts you too far down to have any shot of clearing a CPU.