The "thing" that "happened" to the OP is perfectly normal, within expected parameters, and could have occurred for any one of several legitimate reasons.

At least until next year, when upgrade priority is ranked by total spend over the previous year...

You're right, I misspoke. Are complimentary upgrade requests initiated at the time of booking, then?

Yes by status and then date of request. The exception are Y-UP fares (essentially a walk up fare).

Wouldn't a CK also bump out an EXP regardless of time of request? I was #1 on the list and upgraded as boarding began on IAH-DFW last Thursday. Toward the end of boarding, the FA comes over to me and hands me a BP for 9C, she apologized but said that they had a late check-in but the other PAX was a CK member so they allowed them on the flight and gave them my F seat. I thought it was strange, but its such a short flight so I didn't argue. 9B was unoccupied and the F FA took great care of me during the flight, but I did find it interesting that the check-in cutoffs didn't apply to a CK. After taking 9C, I looked at the UG list and sure enough, I was #2 and the CK who took my F seat was #1.

CK is not supposed to have any effect on your upgrade priority. In your case the CK could have requested his upgrade earlier than you but didn't appear on the list earlier because he hadn't checked in. It appears his CK status came into play only because they bent the rules for him and allowed him to check in late.

CK does not give priority on the upgrade list. For upgrade priority, they are treated like any other EXP.

This is what I'm willing to be happened in your case:

1) CK presented themselves for check in past the cut off and after your upgrade was processed.
2) Once the CK was checked in they would be moved to the airport upgrade list (if not already upgraded) and they'd fall wherever they'd fall based on their upgrade request time stamp. In this case, the CK most likely had an earlier upgrade request than you so they went to #1 and you moved to #2.
3) Airport agents saw this and figured it would be easier to move you and upgrade the CK, rather than upset what they'd perceive to be a higher value customer than an EXP by saying the upgrades weren't available.

If that happens, I don't agree with that at all. If a CK is late to check-in, then they certainly shouldn't be rewarded by taking an upgrade from someone else who already rightfully at the time received. As if it's not enough to allow a CK to check-in after the published time, a benefit nobody else essentially receives, they should be told that at the point others were already upgraded and boarded and that they will have to take their assigned seat unless another seat for upgrade opens up (w/o removing someone else)

- What about SWUs?

Was on I fare confirmed in Y. Airport added me to standby list instead of upgrade list. A total of 5 people included me clear (4 were upgrades). Not sure of the order it was cleared in as they were processed a good 70 minutes prior to departure.

Not sure how I was listed on the PALL list, but I've encountered this exact situation twice on domestic flights:

(1) I was booked in revenue A and trying to standby for an earlier flight at a connection airport. I get to the gate around T-15 but am faced with a long line of oversells from a previous flight. Instead, I hoof it to the AC, where the AAngel manages to add me to the standby list and print me a Priority Verification card that says "A" under class, indicating that I'm a standby for first class. By the time I get back to the gate, they've closed the flight; they look at my Priority Verification card and say I would've gotten on easily--there were empty seats up front, so I assume all upgrade requests had been accommodated.

(2) Similar situation except in upgraded A thanks to a SWU. I got a Priority Verification card with "A" on it at the ticket counter, and this time I clear into the last F seat on the plane, ahead of 20+ on the upgrade list. That said, I had been through some IRROPS that required an unplanned overnight stay, so maybe I was given an RI code on the PALL list or something?

Either way, both times as a confirmed F passenger on a different flight, I was able to voluntarily standby for F on an earlier flight, and would've cleared both instances save for 5 minutes on the first one.

About two years ago I was #1 on the upgrade list with two seats open but did not get it because there were two ticketed F pax from another flight that were standing by for my flight and they got the F seats. Sounds like it was either mishandled or the policy has changed since then.

Quick question, and feel free to move this to an appropriate thread. Today RDU to DFW on #1052 I was #3 on the upgrade list with three open seats so I was hopeful and as the departure time came and went approached confident. The flight was delayed by about 90 minutes. I was sitting in the club after the scheduled departure time and overheard two guys who's CLT flight was delayed (they were connecting onward) working with the staff and were moved to #1052 to make their connection in DFW instead. They were both placed in the #1 and #2 spots on the UG list. Since we were all EXP (assumption) why would they bump those of us scheduled on that flight for weeks?

I'll add that I wasn't overly irritated because I had a decent seat in back and as EXP I've bumped people down the UG list with same day changes, but I would think that changing flights would land you at the bottom of your status category for upgrades. Can somebody educate me on how AA calculates this?

Probably already paid first needing to change flights. If they were in coach they would be after you, but I think they also take request date into consideration.

I believe currently, list priority within status groups goes by date of request. If you change flights but the ticket remains the same, usually the date gets carried over.

Priority within groups will change to EQD in the last 12 months some time late next year (I think?)