Thanks for the input Andy. It is interesting that the guy they upgraded had boarded the flight as well, so would he not also be off the UG list?

He SHOULD have. Some Gate Agents will think they are going "above and beyond" by pulling the person at the top of the upgrade list (because of their status or high fare). Unless something has changed, that is actully not DL procedure. Once you're boarded, you're off the list and given up your chance for an upgrade. So this is what causes the confusion. It has been discussed ad nauseum, whatever the proper procedure is, the agents should stick with it.