There is no rhyme or reason to the way SAS changes the bid requirements (sadly). You just have to monitor it. It is all based on whether they think they can get full price for the seats.

To summarise this thread, things tend to start to become clearer about 2-4 days before the bidding stops. And the prices can go up or down during that time. In fact, they can change up to the point that the bidding time ends. Bidding prices from the US to Europe tend to be more expensive as it seems more people look to upgrade as it's an overnight flight. If you bid fails, you can always make an effort to see if their is a possibilty to upgrade at the airport (if you do that, all you are buying is the seat)

ETA: I can give you a live example. I want to upgrade my upcoming flight from ORD to CPH (economy to business). Two weeks ago SAS wanted 10,500kr for the upgrade. 10 days ago the price dropped to 4,500kr so I placed a bid. Yesterday (6 days to go) the price went back to 10,500kr. The only difference is that since the last time I checked they sold 4 more business class seats. As I have an exit row seat in economy, I don't value the upgrade at 10k SEK. So I keep my (now too low) bid to see if it drops again. If it doesn'tand I lose my bid, I will try and get an airport upgrade if there are seats available as it's usually cheaper than 10k SEK (I don't really need the points right now so skipping over them isn't a problem for me).

As for other questions, I defer to the website (I don't have time to go link it). In summary, your baggage allowance stays the same. Paying with cash for an upgrade gets you a fixed amount of additional basic points plus the points your ticket would have earned anyway.