Just called SE desk to confirm a couple of flight pass upgrades YYZ-YWG-YYZ in a couple of weeks based on this.
I asked the agent if there had been a change to pass upgrades, if they were now being taken out of Z inventory.
She confirmed that they were NOT, that they are still taken from J inventory. The change being made was a directive from Marketing that J=2 or better to issue a pass upgrade, and that direction provided to her was that it was up to the agent to enforce it.
She did say she thought it was wrong, and that if J=1 she's doing the upgrade until she's forced to enforce the new rule.
BAD FORM AC!