No, it's for real and it can be done in the system, but any other GA can override it, sometimes stupidly.

My wife (also AA elite) was flying with our 9 month old kid (paid seat) on a 757 transcon that was not sold out, and was able to get them in an aisle and a window with the AC blocking the middle seat; Sabre reflected the block. The block made sense because it would also benefit of other passengers: who would like to spend 6 hours flight next to a 9 month old child when there's an option not to?

However, by the time they loaded the flight, they had put some hapless person in the middle seat, even though there were 17 other available (and unblocked) seats on the plane. Of course, the passenger voluntarily changed seats (again, who would like to spend 6 hours flight next to a 9 month old child when there's an option not to?), but it speaks poorly for AAers carelessly overriding such courtesy blocks.