Terenz: Between AA's offer of elite status for those Cdn+ members who also held AAdvantage accounts and had some AA flight activity during the past year (and likely only had that activity due to the oneworld 100K promo), and CX's offer of mileage to Canadian members of AAdvantage for all fares, I don't expect too much more. For AA to extend a comp to a Canadian-based Cdn+ FFer, they would likely need to see evidence of having flown transborder or within the U.S. on CP or AA itself (credited to your Cdn+ account) in the past year. And had at least one or two such flights monthly through 1999.
AA's Challenges are good enough means to offer elite status based on actual current flight activity with AA or any other oneworld partner. To carry someone at an elite level, the carrier has to benefit from your business and have some guarantee they will get more such business in the near future. But remember, the benefits of AA elite are not as great as on Cdn+, since domestic lounge access is not a perk. As for the opportunity to upgrade while undertaking flights during the Challenge, your Cdn+ stickers will be useable, you just won't have the ability on those flights to have confirmation in advance until you reach elite status.
I for one think it is fair for the airline to ask you to put out a little in order to get their elite status, particularly if you are not likely to fly them several times a month as would be the case if you asked to be comp'd by switching from DL or UA. Is it fair to those U.S.-based FFers who actually had to earn their 25K or 50K to get Gold or Platinum that someone who has seldom flown AA gets immediate access to the benefits they have paid for? That's one of the reasons the Challenge is not widely advertised. (If I was a U.S.-based AAdvantage member and read your post about all CX fares being eligible for miles/points accumulation only for Canadians, I'd be a bit pissed off at both AA and CX.)
Yes, AA wants your transborder and intra-U.S. business, but will only go so far to get it. I think they've made some pretty attractive offers to us.
(If you decide to fly QF to Australia -- as I think you are contemplating -- you'll get AA Platinum under the Challenge and if the flights are completed after mid-July, you will hold that status through to Feb 2001 [a year-and-a-half]. You will also get double miles on the whole trip, not just the HNL-SYD-HNL portion as Cdn+ is offering, so your AA balance will be at least 35K at the end of this single $1,199 trip. And after you qualify for Platinum, all your flights will get the 100% bonus.)