Where did you get this idea? It might be true for airlines in Australia, but the USA legacy carriers give you a confirmed upgrade if inventory is available when you use instruments, which often don't require expensive fares. Similarly, free upgrades from domestic full fares (Y or Y and B or Y B M depending on the carrier and your elite level) can be confirmed at the time the ticket is purchased.

BTW, I agree with you that some of the award booking services don't seem to know much. AFAIK none of them are official travel agents, which means you really don't get any consumer protections in dealing with these services.