I have refused a room several times. It's not untoward if one is unsatisfied within the norms of the category booked. In many hotels those categories will include leeway. And sometimes it's amazing. Works when initial assigned room is, graphically, sub-par. Not a way to sneak an upgrade (in my opinion).

Cases in point:

-- Jr. Suite at FS Seattle was cramped and awful; given a better suite in same category
-- Jr. Suite at Le Bristol was dreadful; upgraded beyond stratosphere
-- Basic suite at the Sandpiper (Barbados), upgraded to top suite with terrace, private pool (although not heated)