Here's another way to frame essentially the same question: if you earn frequent flyer points on travel paid for by an employer, is it acceptable to use them for personal travel?

I think in the large majority of cases the employers are okay with this, tacitly or otherwise. It boils down to optics and what the employer finds acceptable. If you keep the refund that's one thing. If you keep it and don't tell anyone about the downgrade and someone finds out later, that smells like trouble.