My recent experience suggests that this is no longer true.

I waitlisted an upgrade sea-ewr in Jan. I'm silver. The flight was full - sold out Y and F. The waitlist didn't clear by the previously talked about 24 hour mark. When I checked in at SEA (OLCI doesn't work when there is a waitlisted segment) I was told that the mileage upgrade put me at the top of the upgrade list - but as F checked in full it didn't matter. Got a BF upgrade. Checking online at home the next day, it appeared that the waitlisted segment was flown and the previous Y segment was cancelled.

So, I'd have to say that mileage upgrades now seem to take have a higher priority then "free" elite upgrades using "R" inventory.