I would fly that airline (we are talking AA right now) when I knew I could get a perk, upgrade, etc. But, I would not go out of my way, since after all, they have already given me the status, after only 8 months of flying. If I had a chance at elite status on another airline, I would surely give them my business.

Alot of it depends on your situation. If you are in a hub city and tied to one airine, your decisions are much different than if you can pick and choose.

If AA is trying to provide an incentive to fill their seats, they blew it.

If AA wants to reward those that have traveled with them all year, and will continue, they blew it (by insuring that number of elites was larger)

Marketing 101 - What is the objective?