The potential downside here is that elites who desperately want the $$ off could sill fool the system with phantom bookings that are cancelled at the last minute. If you recall, waitlisted upgrades are cancellable. In other words, I can always cancel my request for an upgrade and ride in coach.
Huh - am I misreading something? I thought the OP's idea was pretty smart. He wasn't implying that elites would get $$ off the ticket price, but rather the upgrade fee. Once you've paid the NON-REFUNDABLE fee for the UG, there's not much point in canceling the request (by being non-refundable, they aren't really cancelable).
The sheer number of Platinums on CO would lead to a huge revenue loss if all Plats are issued a SWU, especially with your idea of upgrading with no charge from H/K fares. Besides, what prevents phantom bookings in this case? Also, this leaves Golds and Silvers in the lurch (if SWUs are issued for ever 75,000 miles)
I think the idea was SWUs would only go out for every 25,000 miles AFTER 75,000 - so your talking the 100,000+ club, not every platinum. This starts to narrow down the riff-raff quite a bit - and I suspect once you get to the 125,000 mile level the small % of CO elites who make it to this level are high-paying, CO star material.
As for the 72-rule and phantom bookings, I think the OP's thought was that the number of people holding SWUs would be a small enough % that it wouldn't be too difficult to spot - there just wouldn't be that many of them out there. I like the notion that a SWU would be exempt from the 72-hr rule.
And now my rant... (and I know this has been argued before) I still have yet to figure out how a REWARD - which by it's very nature is a priviledge earned by one's continued loyalty to the airline and intended to enhance one's travel experience such that said person will want to continue their relationship with the airline - should have to cost so much money on top of the dollars already spent to earn the REWARD. H fares already have no service charge - but an elite on a K fare - come on! I think any elite paying a H or K or Y fare should be able to confirm an upgrade on the spot (with limited capacity control), without further fees for their supposed REWARD - there's not that much revenue leakage on an international K fare. Additional fees and restrictions should be reduced down to the B fare level as well (i.e. reduce the current price structure).. Pre-2002, a B fare was all you needed - no extra fee. As many people have noted, it's generally more cost effective to get a BF reward ticket for 100k than to spend 40,000 miles plus several thousand dollars...(not to mention mid $2k range D fares seem to be becoming the norm these days). How much revenue is lost then???
I don't know what the answer is - but I think the OP is on the right track