Highly likely to be crap tech - if they really preferred the miles+copay over the TOD offer, they could just process the miles+copay upgrade at that point. In fact, a properly designed system, when it calculated that it wants to list an upgrade at $X, should automatically process the highest priority miles+copay offer if the miles+copay is worth more than $X (according to AA's internal valuation of the worth of a mile) rather than listing the upgrade.

I wasn't seeing any upgrade offers for an upcoming flight, so I tried switching my frequent flyer number from my AS number to my AA number and upgrade offers starting showing up right away.

Fare levels:

• J: $3,061
• R: $734
• I: $614
• ...
• Q: $294 (fare booked)

Offers:

• Oct 30 PM: J4/R2/I2, Offer: $355 ($35 more than current difference in fare)
• Oct 31 AM: J4/R2/I2, Offer: $250 ($70 less than current difference in fare)
• Oct 31 PM: J3/R2/I1, Offer: $520 ($200 more than upfare to I; $80 more than upfare to R)*
• Oct 31 PM: J2/R1/I0, Offer: $629 ($335 more than upfare to R; $2,138 less than upfare to J)*
• Nov 2 PM: J3/R3/I1, Offer: $280 ($40 less than upfare to I; $160 less than upfare to R)
• Nov 4 AM: J2/R2/I1, Offer: $220 ($100 less than upfare to I; $220 less than upfare to R)

*PNR has 2 passengers, so presumably the upgrade offer is pricing both based on R inventory. Interestingly when there's only J2/R1 inventory left, AA will sell both remaining seats at much less than the full J upfare.