While DL's policy does gall some of it's frequent flyers, I don't think it led to the mass exodus of Medallions that was predicted. As Opus put it, the "LUser", well now the "insULT" , policy is a boon to many of us. In many markets K's truly are not prohibitively expensive, and in some markets they're always the lowest available anyway.
I'd be willing to bet that we'd all better get used to it, because I have a feeling everyone else will follow DL's policy of not upgrading the lowest fares in the very near future. It saves the best perk of the elite status, upgrades, for those who pay a little more, but it also doesn't screw the very frequent low-fare flyer out of all of his benefits.