Effrem,
I have one question for you... isn't it fiscally responsible for a company to require you to use award miles on company travel that were gained by flying on company paid travel? Why or why not? Presuming that you fly enough to care about airline related marketing tools, doesn't elite status in and of itself achieve the same goal about encouraging future behavior? At the level of flying I do, the base miles are inconsequential. It's the elite perks that actually get my feet and butt on an airplane.
You're right in that it sucks to have the rules of the ball game changed at the 7th inning stretch, but, as is anything with life, the only constant in life is change.