Miles are deducted at the time the upgrade ticket is processed which is after the upgrade clears. When the upgrade clears, MPC will send you a message via email and SMS to your registered contact information. At that point there is an alloted time to do the ticketing which I believe is 48 hours (I am probably wrong about that, someone else can correct). To do the ticketing you need to contact MPC. If there is any fee to pay (airport tax, etc) the ticketing office will try to contact you on your registered phone number. Occasionaly, I have had to contact ticketing office myself when I am in HKG and my US phone number doesn't work. If there are no fees, the MPC agent will working with ticketing office and you will get an email within a day or so with your new e-Ticket. Also Manage My Booking will reflect the new ticket and you won't see the old ticket anymore.
Regarding required miles, I believe the rules have changed recently and waitlisting an award requires a minimum of 70% of the miles needed for the award. As part of the ticketing process, the miles are deducted from your balance. If you are short, within 70%, you can top off your balance, see
Topping of Asia Miles,
I don't really understand your second question. I convert upgrade awards on travel agent purchased tickets all the time and there is no restriction as long as the ticket is within the required fare class for upgrading, for PEY that is R or W class. If you are talking about using Credit Card points for upgrading, the only currency available is Asia Miles, so those points need to be converted to Asia Miles. Very frequently MPC will give you a few days to transfer miles into your account. However with the new rules, you still in 70% in order to apply for the upgrade award.
If you are speaking about tickets purchased with points on Chase or Citi travel websites, I don't see an issue with that provided that tickets are in the appropriate fare class for upgrading. However for AA codeshare tickets, I don't believe those are upgradeable. I have colleagues who buy AA PEY tickets to HKG from the US on AMEX travel where they sometimes get a very good rate, but those are AA tickets on CX metal and are not eligible for upgrade.