Following up, as there have been no responses. I completed this travel last week and wanted to report back. I bid for upgrades on my connecting flights for both legs of my travel. So my first flights -- to Iceland -- were in Economy, but I connected in Saga. In both directions, I was able to use Sage Premium check-in at the airport, we were given lounge access at the departure and connecting airports, and we got the full business class luggage allotment for both legs. Hope this is useful to others.

p.s. For both upgrades, I bid the lowest possible and my wife and I were both upgraded.