I cannot fathom why the OP would not have done the homework as to what the miles cost might be. To me, that is the logical first step. The OP was certainly aware of the miles needed to purchase the future award flight. Why not this one?

To me, the answer is obvious. The OP was actually wanting an op-up and didn't want any pre-allocated miles involved, but didn't articulate that. The operator's unusual response played into the OP's hope that they HAD just received an op-up. At that point the OP should have sought clarification of how the upgrade was processed, but didn't.

Why would the OP have enquired about a miles upgrade if they didn't intend spending any of the miles purchased for another purpose?

There is fault on both sides here, a lack of clear communication. The OP is not blame-free, and I personally don't think compensation is appropriate.