No personal experience, but from my understanding it has to be a revenue ticket. I believe a class change on a mileage ticket would just be a reprice (they would collect the difference at whatever the currently quoted D1 fare in miles is).
Correct. While you can use GUCs on PS award tickets to upgrade to D1, MUAs can only be done on revenue fares (it's listed in the eligibility rules for MUAs that they cannot be applied to Award Travel).
It's possible you might get an FCM offer to upgrade on an award ticket. But these are only generated by system and if there are none offered you can only upgrade by exchanging PS award for a D1 award.