I agree with all that. It wasn't intended as a realistic scenario, but just as an illustration of a point. If I had instead said "I can see how it might make more sense, from a revenue-generating perspective, to sometimes give the upgrade to a person who bought a lower fare, if you have enough data about your customers and their likely behaviour in various counterfactual situations", it could be hard to see what I getting at. The advantage of the unrealistic scenario is that it makes that point very clear, but a disadvantage as you bring out is that the unrealisticness of the scenario is a distraction or makes it seem the whole point is fanciful.