The same way every other airline gets away with it. When **AA** inquired a decade ago, the IRS determined that the 7.5% transportation excise only applies to base fare and mandatory airline imposed fees on the ticket itself (conveniently the same thing on the ticket used for things such as award mile spend earnings). The sticker-type upgrades are considered ancillary purchases same as a seat purchase or any other ancillary product the airline might sell to go along with the ticket. Also remember the 7.5% is actually a tax imposed on the passenger, not the airline. And I realize some may argue that UA is inflating the cost of a PCU by 7.5% to then pocket it, but I'd consider that an unlikely case/irrelevant point because they're going to charge whatever they think they'll get for it, same as they do for tickets. Though the numbers probably wouldn't come out so conveniently on a whole dollar amount every time if they were applying a 7.5% adjustment to it. Regardless, the IRS, being the IRS always gets their money, UA pays their tax on ancillary revenues along with all their other income as part of their corporate taxes.

Ultimately refaring vs paid upgrade accomplishes two different things (which is why the tax applies in one case but not the other). Refaring puts the ticket into the completely new business fare/reissues the ticket. This means any airline that sees your ticket will see it with a fare that is for travel in the business cabin. Doing a paid upgrade causes the ticket to be revalidated in United's system to reflect the new booking code (to answer OPs question: the J upgrade waitlist will be prioritized based on whatever O/A/R booking code the PCU puts them in). However with the PCU the itinerary is still ticketed for the economy fare. Usually this distinction is minimal, but it does matter for involuntary changes if they're rebooking on another airline. While UA can/will protect upgrades of any type across their own metal, the policy for rebooking on another airline dictates rebooking should always be in the cabin of the ticketed fare, not the upgraded cabin.

Edit: just to add a bit more on the taxes. Specifically the 7.5% excise tax is promulgated at §49.4261-1(a) (https://www.ecfr.gov/current/title-2...#p-49.4262-1(a))
And of course, because it wants you to look at the defined term in § 49.4262-1(a)
Which, as written, is entirely useless when it comes to explaining if ancillary purchases should be taxed, but is why the clarification that AA got is so important. Essentially the IRS determined "transportation by air" refers to the fare that is purchased, which I actually agree, is probably the best way to define that term since the fare is ultimately what is dictating the terms of the transportation. But also explains why the refare gets the 7.5% tax hit, but the paid upgrade doesn't.