In my book trying to sneak into the next class or two up be stealing.

Would it bother me enough to notify the crew about it if I saw someone else doing it? Probably not - if the person were sitting quietly.

Would I do it myself?

No.

I think I would mention it to the FA.

Was seated in a largely empty AA J flying ICN-DFW when a young lady sat down and began enjoying a PDB. Noticed she was nowhere to be found after take off. Can only assume she got the boot!

F on TATL is 5 figures. If a paying customer showed up with that sort of ticket, it makes perfect sense to tell an airline employee on a free ticket to move back.

Just a few weeks ago I was on a flight, sitting in first class (3A). A guy comes on late, looks a little shady, plops down in 3B. Flight attendant comes by and asks us (mostly him) for boarding passes. I take out mine, it says 3A. He takes out his, and it says . . . 3A. Hmmm.

The flight attendant quickly noticed though that his boarding pass was for a prior flight on the same airline. She ask him for the rest of the boarding passes in his itinerary, and lo and behold, his boarding pass for this flight was for 25E or something.

The man apologized for his "confusion" and was ushered to the back of the plane.

Absolutely. Airline staff know they're never safe until the door is closed.

Now that was innovative !

That guy is smarter than the average bear...

Not even then. I've seen doors re-opened.

Legalities
 

Whether this is stealing or not is going to depend on the jurisdiction. Another possibility is that this is fraud (which can also be a criminal act) or passing off. It could also be considered accepting the terms of the first / business class ticket and associated fare, and therefore incur contractual liability to pay up.

Hypothetical, flight from LAX to Hawaii, pax moves into FC after the flight is 50 miles (over open water) from LAX, how is the jurisdiction determined?

US. Flight lands at LAX, US police arrest pax.

I wonder if we could change that policy so that if it happened over water the FAs could simply open a door and let the passenger "get wet".

Yes, US. And the plane doesn't "lose" jurisdiction once it gets into international airspace. There are various rules governing this but at a minimum the country of registration of the aircraft can have jurisdiction.

Had to laugh at this!

Is there a jurisdiction where this isn't a crime?

Over international waters, where the vessel is flagged is what dictates what laws apply. You can't kill someone just because there's no Republic of Pacific Ocean to charge you.