I think intra-EU premium class is as big of a joke as the next guy (and a long way from even US F), but I just don't think BA has that much of a choice. There just aren't enough premium leisure travelers to drive a really nice product, and most companies (rightly) refuse to pay for premium cabins for such short flights. Even LHR-IST is shorter than a US transcon and if most companies won't pay for you to fly F from JFK to LAX, then why would they pay for the 2-hour flight from LHR to CPH? And, without any corporate demand, BA just can't justify giving up the capacity.

So, BA effectively offers CE as a replacement for fully refundable Y, keeps corporate travel policy-makers happy, occassionally squeezes a few extra bucks out of a leisure traveller, and gets to tell all the connecting TATL passengers that they have a premium cabin for the entire itinerary. It stinks for those that want to pay a premium for something nicer, but there just aren't enough of them.