As I already tried to explain, AFAIK, IHG does not mandate that the property processes the AMB or even RA upgrade at time of booking. They can and it would maybe be considered a good practice, but it is not a must.

Without getting into the intricacies of hotel revenue management (Revpar etc.), trying to sell your more premium rooms until the last day prior to arrival of the guest with the guaranteed upgrade "may" make sense and IHG is not preventing the property from doing so. To the contrary, they empowered that practice by offering a defined (cheap) way out with 10k points per stay (not even per night if multi night) that does not hurt a property that much versus a solid chance for generating more revenue which is their job.

The IC SD is well within their rights to do what they do, whether we like it or not. They'll look at all the to be upgraded guests the day or night before check in and make the call on upgrades - simple as that. Best way to do it from a customer point of view - probably not, but you never know. They may also bump you up beyond 1-category if they want to free up booked lower category level rooms. YMMV..