How were you badly treated?

Given that , as you state, there is no upgrade entitlemeent to Premium Economy, once the flight was closed , it is perfectly reasonable that airline employees waiting to travel were ( assuming that they are entitled to PE ) given PE. It is hen perfectly true that these seats had been sold. It is nothing to do with you who they were sold to and for how much.

The carry on baggage allowance on AA is 1 carry on and 1 personal item. The agent was doing nothing wrong in not allowing 2 carry on bage - you could have checked a bag in and then no issue at the gate

Nothing wrong seems to have happened and any protections like EU261 wouldn't make any difference here. EU261 protects when delays/cancellations/downgrades occur and would be good to have in the US - it would , I think, discourage downgrades occurring