Sure, it sucks. But that's the way of the game. It is far easier to just give the passengers without seat assignments boarding passes in BusinessElite, than it is to page (and try to find) elites in a specific order of status/fare, see if they are traveling with anyone (willing to upgrade), etc. If you were the overworked, haggard gate agent, would you search for your loyal passengers, or just take the easy road?

Hey, I'm not supporting this whatsoever, and in my airline the gate agents would do what ever it takes to get the elite customer. That's rewarding loyalty, and that's the right way to handle the situation. But reality is reality...

Sorry about your experience, and sorry you feel you got ripped. I would feel the same way. I'm not defending what happened, just saying that in the real world it is unlikely that the gate agents would go the extra mile.