I'm not entirely convinced this wouldn't be covered by EC261, given it was a confirmed reservation with payment made. Courts have certainly sided with passengers before on that.

However, unfortunately EC261 is really weak on reimbursement for journeys under 1,500km at only 30%. At that point, you're far better off with a full refund of the upgrade cost because that's bound to have more value than 30% of any YQ paid on the award ticket plus that upgrade price.