I've never had to pay for an upgrade under circumstances like that, though there might be third-tier companies out there trying to do what you mention. I've had a time or two where the whole lot was empty and they were dispatching cars as fast as they could clean them. In those circumstances if you had a high-level car reserved you'd be stuck for a wait. But thankfully I've never had that happen with Hertz, Avis or National, and even Alamo seems to be getting better.

I've also had a case or two where I've gotten upgraded from a compact all the way to a minivan or SUV for lack of other cars on the lot. I learned for the first time what gas-guzzlers the SUVs were in such a case on a 2-week rental 5 years ago; with prices as they are today I'd have to turn it down.

Am also noticing less pricing spread between compact and full-size on weekend rentals (am a big leisure traveler). On some of my bookings of a mid-size, the full-size (2 notches higher) was only $2/day more. That might indicate they're having more trouble than in the past in renting out the bigger cars, possibly because customers are more conscious of fuel economy.