That's new to me. I didn't realize that P/G companions trumped silver elites.
And really that's not so terrible if those are the rules since it's really only relevant within the 2 hour window (I'm sure we could debate the merits of higher elite companions vs. lower elite flyers, but I do see merits on both sides). However, the idea of not being able to get an upgrade on a "Y" fare outside of the 2 hour window on the day of departure is a horrible oversight by CO. It really shouldn't matter where you buy the ticket or whether or not it is an e-ticket.