The "Circle Issue" is a variant of the one adressed many times in this forum. Star and Oneworld have moved FFPs on from being simple reward programmes to marketing devices which target revenue generators, NOT frequent flyers. They are successful airlines, Swiss is not.
LH's top tier is a VERY high-cost way to maintain the loyalty of VERY high-spenders, it was formed to separate these from the rapidly growing GOLD class. They certainly will not want to add to the select HON membership from STC Circle which has a relatively large membership, and had very ill-defined criteria for joining and maintaining membership.
You can be certain that LH will look at Circle member's travel patterns: those that generate required levels of revenue will be welcomed aboard. Others will be "downgraded" to Gold. That's the business.