A difference of over $500 does seem to be more than I've seen in the past. Last fall I was seeing a difference of around $200, which wound up being more or less the same as the premium charged by AA. That having been said, other posters have correctly said that the ability to sell you that fare does not guarantee that an award will be available. What I do is:

find the flights I want

play around to see what the various fares are

check what C seats are available and make a note of it

check online that a Y seat is available in an upgradable fare bucket at a price I"m willing to pay (I usually go with M/H, since I have more miles than money!)

get the flights on my screen up to the "book it" point (you could also place it on hold)

call the awards desk to have them check on upgrades

if they say "available" I say "wait a sec", push "book it" and them give them my PNR.

ask them for the seat I want and know was available a few minutes earlier

saves me the booking fee and I get the online booking miles.