I think it’s important to remember that discounting and awards do actually happen on routes like this; as you said, connecting itineraries can receive dramatically different pricing than DTW O&D would. EWR-DTW-PVG on a Sunday-Sunday itinerary at the end of september is pricing at $4200 in J round trip; JFK-DTW-PVG on the same flights is pricing at $1800 in Premium Select. Neither seems out of line or particularly stellar for 30 day advance purchase in those markets, and that’s before any discounting under a hypothetical corporate contract.

At those prices, they are refunding you almost double the one way difference at $2000 in compensation. Seems fair to me.

Of course, I can see where someone who paid $9-10k wouldn’t be interested. But that person is also likely price insensitive and much less likely to be motivated by downgrade compensation anyway, or else they wouldn’t have paid so much for their ticket to begin with.

It’s easy to extrapolate out one’s own experiences with pricing to the general case, but you have to remember every flight has a mix of profitability across all the passengers - even peak flights at peak times in premium markets. I always fly on discount J fares or upgrade certificates - I think $2500 is the most I’ve ever paid for a single round trip, thanks to flexibility on price and destination as a leisure traveler. But I’m sure I’m frequently on flights with people who paid 4x or more my fare, and that mix of elastic and inelastic demand is a healthy part of a balanced and profitable airline.

In this case, the overbooking could have been caused by any number of situations unrelated to price - a cancelled flight situation, perhaps, resulting in multiple rebookings onto what was previously going to be a not-full flight with cleared advance upgrades. Or I’ve even seen wacky situations like last minute pilots needing to fly for positioning who are entitled to J seats under their contract, thereby requiring revenue passengers to be reseated...