As far as I know mile upgrades and complementaries use different inventorys. I used miles for upgrades to BF a lot, before they startet HoKeY. Thats E using miles, I believe. You can waitlist for E seats on the domestic portion if it's not available at time of ticketing (on international flights only after the international segment cleared), and as elite still be in the automated UG cue or upgrade at the gate. If no E seats open up but you're elite you might still be in first. I don't know the free upgrade inventory - but I know they usually hold two seats for walk'ups that are then given out at the gate.
If you referred to standby as gate standby and not waitlist, this is how it works: No standby using miles unless this one segment was paid with first miles but could'nt be comfirmed. Then the priority is correct the way you put it, except that paid first or even full Y flyers will probably still have higher priority.
(Edited for added info ...)
[This message has been edited by ch_usa (edited 01-27-2002).]