I agree, staff upfront (in stead of you) should not occur if you are paying to be there, my point. If there are available seats then I do not mind staff staying there - I see no need to upgrade M-passengers to C so staff can sit in M.
The same goes for that I do not think you should have any staff next to you on longhaul travel nor should you be bumped out of your seat in any way. I do not think you should be in a middle seat in short haul economy and staff in the same cabin. If there are free seats left, be my guest.
The only thing KLM made me sure of is that I will not be travelling with them again in C. I now have what I wanted, which is access to the lounges. Next time I decide to fly C I will chose a different airline, for economy, I will more than happily stick with KL.
It is truely their loss, not mine.
(incidentally, my room mate is now dating KL Cc)