I would consider such a policy acceptable only when:
- Travel is during working hours (e.g. 8 to 5)
- The fastest and most convenient itinerary is chosen regardless of cost
- A policy is in place that calls for business or first class when travel is greater than a certain length (e.g. 4 hrs)

Why?

Because if I had to travel outside of working hours, even if the ticket was paid for by the company, that's my time. Therefore my miles.
If the company is trying to save money by making me fly longer routes through additional cities, then that's unnecessary wear and tear. My miles.
Why have miles in the first place? To afford me the luxury associated with frequent business travellers. If the company won't pay for first/business under certain circumstances, why can't I use my miles to upgrade longer fares, as I would if it were my own travel. No pay? My miles.

Thankfully, if I ever join a company that requires travel and has such a policy, I'd steer clear!