How much more would you be willing to pay to upgrade to business class?

As an example, the lowest 100% mileage earning economy ticket AMS-LAX is now only euro 766.

The lowest WBC ticket for this route is euro 2363 but is a restrictive holiday fare (the cheapest normal WBC ticket is 4479 and more last minute or higher in demand fares go as high as euro 6431.)

For the one way segment "upgrade", considering that the cheapest WBC ticket would apply, is euro 794 more.

Would you be willing to pay euro 794 more to upgrade each segment if there is availability? If so, why not just buy the restrictive WBC ticket when possible in the first place?

If you and others are only willing to pay around half or 1/4 of that amount (say 395 or 195), then soon everyone would be gaming the system and only upgrading on the cheap at the last minute. While KL could charge the full-paying, last-minute business traveller 6431 euros, in your scenario they would only get maybe 400 euros more than an economy ticket on a RT ticket.

Considering the importance of the margins in the premium cabin on overall profitability of a flight for most airlines, this doesn't seem like a winning strategy.

As an alternative, as others have mentioned, they do allow you to upgrade out of AMS on a space available basis by first paying the difference in amount to an upgradeable ticket and then using miles for the upgrade. If you do the math, then you are in effect paying for the WBC ticket at slightly more than the cheapest WBC prices (assuming you value your miles based on their buying power). Of course you can only do this as long as you have been loyal long enough to have enough miles.

If they "used their database" to offer you business tickets on the cheap they would cannibilize their full fare business sales. Their database would also show them that you are a cheap ticket/value purchaser and that your years of purchase behavior demonstrate that you do not value their flexible fare or business class products (or can't pay for them or get permission for them). You say you are willing to pay more for better service, yet your personal behaviour recorded in their database demonstrates the opposite. Giving away valuable product to those who cannot and will not pay for it would seem to be a poor direct marketing strategy.