Here is what happened:
A voluntary reissue (change from UA 8898 to LH 754) would trigger a recalculation of the total fare of the total ticket. You get a new e-ticket.
Of course the system reissues the ticket and books you into Economy travel class.
All applied upgrade instruments would vanish. The refund of the older ticket and upgrade instruments is dependent on the fare conditions. If the upgrade was non-refundable, then LH was right. You did the reissue voluntarily.