About a month ago, I was on a US Air flight from Charlotte to Denver with a 1st-class ticket. Just before the door closed, a man got on the plane and quickly hustled to the 1 empty seat in F and sat down. The flight attendant immediately asked for his boarding pass, and he said he didn't have one. He trotted out the "get on the plane and sit in any seat" story, but the flight attendant didn't buy it. As she took a closer look at his carry-on, she saw "CREW" tags and became suspicious. Within 2 minutes the police were on the airplane, cuffed the passenger, and took him off. Apparently US Air had been tipped off about someone who was not only sneaking onto airplanes, but using fake credentials to do it. Since the guy's primary objective was presumably to get to Denver, he might have succeeded had he gone to the back of the plane.
Somebody who knows more how airlines handle crew passengers can probably fill in some blanks: How did he get a boarding pass to begin with? Was this guy also a security risk - or just a thief? How did the airline get tipped off about the scam to begin with?
Anyway, moving on to a couple of other points.
(1) I've flown in F both on a real first class ticket (albeit rarely) and on upgrades. I think most people these days know the gig well enough to not get bitter about people who are there with awards or upgrades. Anybody who is purchasing a first class ticket probably also accumulates miles as well. If they are that smug about the whole thing, then they need to get over it. However, most people aren't like that.
(2) Airlines giving courtesy upgrades to biz/first: US Air is pretty good about this. I fly transatlantic with them a couple of times a year and get a bump about 1/3 of the time. I'm Gold Preferred (2nd-highest tier). I'm also Prem.Exec. on United (similar tier) and rarely get an upgrade for free. It definitely affects my buying decisions - I could use either United or US Air to get to London, and I'll always choose US Air if the prices are remotely similar.
(3) Trying to steal a free upgrade just sounds stupid. I *know* I'd get caught if I tried it. Related question, though: On some narrowbody jets, the best seat on the entire aircraft is in the exit row in coach. Usually, you must be an elite flyer to get one of those seats. If I'm not an elite flyer, and I move into an empty exit row seat after the door closes, is that stealing? I tend not to think so - I liken this to grabbing a better seat for the last couple of innings at a ballgame.
(4) And finally, on the subject of certificate upgrades: I've heard of people trying to swap out more-valuable upgrades for less-valuable ones, and I agree that this is deceitful and wrong. HOWEVER, the whole practice of using paper upgrades has been established - by the airlines - as a fairly interpretive thing. For example, the gate agents in Kansas City only ask for 1 800-mile upgrade to fly to Charlotte (808 miles). In Charlotte, they ask for two to get back to KC. On afternoon flights when they aren't serving a full first-class meal, they tend to be a bit more lenient on the certs. And most - but not all - gate agents will honor expired certs if you are still an elite FF member. The bottom line: using paper certificates is always somewhat of a game. Playing the game isn't stealing, in my opinion. Once everybody computerizes it, there will be less subjectivity.