I had a very frustrating situation today. I have a confirmed first class ticket in the afternoon. It's an I class fare and same day confirmed can only be done if there's I class available.
I'm fine with that, though I think AA should have more flexibility (maybe as long as there's D clas?)
In any case, only 1 seat in J was available. So I go standby.
At the gate, I am #1 on standby. There are people on the upgrade list.

Results: The GA upgrades one paid economy passenger and offers me a seat in Y. I refused.
It was explained to me that I would have had to be confirmed on the flight before they look at my standby. They do the upgrades to first before they look at standby, even if your standby is for first.

If this is really the correct procedure, I'm not going to buy any more domestic first tickets. I pay 3x the amount of the Y ticket and end up worse off than if I had bought the Y ticket and done a SDFC the day before in economy and then I would have most likely been at the top of the upgrade list like I usually am.

If you want more of my money, AA, process first class standbys BEFORE doing upgrades!