Its not an upgrade. Its merely being unable to confirm in space, and being on a waitlist for the space. Priority is actually very high -- just below revenue confirmed tickets, award confirmed tickets, confirmed upgraders (ie: from R space), LMU buyers and deadheading captains.

The key is to make sure that you're not processed as an 'upgrade', but rather, are put on the waitlist for the space. If there's space, you'll get it in preference to a SE without a confirmed upgrade, even if they hold a full-Y (ie: Latitude) ticket.