"Giving someone else an upgrade in order to give the member an upgrade would seem mad to me."

Well, in the real world (ie businesses that make money) looking after your best customers and keeping them loyal would not be seen as mad, but as sound business sense. However, I am willing to bet that there is at least one J class customer on my flights, who has upgrade credits or points in their account and doesn't know that they could upgrade to First. A quick call to them could keep TWO good customers happy while reducing liabilities / increasing economy revenue etc. Why bother spending all the money on a FF loyalty scheme if you don't encourage your customers to use it and benefit from it? If I don't get this upgrade, QF can be sure I will be moving my business to other airlines in future, and permanently.