OP did the right thing...I would have done the same. Perhaps by discreetly telling the FA privately, although if the self-upgrader was an obnoxious moron about it, I would do it out in the open.

I come from the 'been there, done that' crowd. A number of years ago on Eastern, I had a kid booted out of FC who snuck up to flirt with a young girl riding there with her mother. The FA just about punted his sorry behind right down the aisle.

On a recent flight, some kid from coach decided to stow his bag in FC. I held my tongue until the last FC passenger came on and was having trouble finding a place for his bag. Rest assured, I told the FA what happened and she went and grabbed the kid and made him remove his bag and stow it in coach.

What the OP's seatmate did was theft, pure and simple. He should have been booted back into coach, and if he put up a fuss, booted right off the flight. Everyone in FC pays to be there - either by buying the seat, trading in miles or through status earned by loyalty.

To me, this is no different than paying for a meal at a buffet restaurant and informing the staff if someone came in off the street, grabbed a plate and started helping themselves without paying first.