This incident was totally unacceptable -- whether it was based on race and/or attire. If the OP deserved the upgrade, he should have been given the seat. If you've never experienced discrimination of this type, rest assured that it is humiliating in the worst way.

Minimally, I would nicely respond to AS customer service and let them know that you expect your legitimate complaint to be addressed. Be brief and concise. If I didn't get some type of explanation/apology, I would file an official complaint with the government.