To reinforce what Aviatrix says, just have a look at the mileage run forum, and compare the number of European originating MRs and the number of US originating MRs. After that, compare the FF cost per mile on Europe-originating MRs and that of US-originating one. You will see that it IS possible to be elite in the US for a sum of money which is substantially cheaper than here. I would also add that, in continental Europe, train networks are much more developed than in the states (and distances between major economic centres closer than in the US) , with the consequence that your average US businessperson will tend to fly much more than your average European businessman.

You are right. You can't cherry pick the best of all. It all comes as a package. If NW denies upgrades from low fares to its own elites, it is because NW does not want to bear the cost of this. KL is happy to bear this and therefore allows such upgrades. OTOH, KL does not want to bear the cost of intra-European upgrades for its own elites, whereas NW is happy to bear that cost. THe reason why NW elites did not have access to lounges whereas KL elites did was because NW chose (like other US programs) to make lounge access the subject-matter of a separate, fee-based program whereas KL, like its European competitors, sees lounge access as a typical elite perk.
There is nothing 'unfair' there: two different programs making different choices, or rather responding to the demands and the competition conditions on very different markets: the European and the US markets. Let us not be fooled: FF programmes are primarily designed for a target audience, and European programmes are designed with European flyers primarily in mind whereas US programs are designed primarily with a US market in mind. The fact that some European flyers join US programs and some US flyers European ones does not change that basic reality.