IMO, the order should be:
hardship (sorry, UA GS, but Ma Kettle is going to Grandma Kettle's side at the hospice)
highest level frequent flyer program
full fare ticket holders
all confirmed business class passengers
those who checked in for the flight earliest
those whose originating connecting travel was earliest
those who were ticketed the furthest in advance


possibly after the above (and in no particular order):
those who were randonly selected by a computer
passengers traveling with small children

should not be considered:
those who physically ran and pushed their way hardest to the front of the rebooking line
those that beg the best, usually claiming they have a super important meeting the next morning
alphabetically by last name, either A to Z, or Z to A