"Confirmed" should mean something
 

I am of the opinion that when an upgrade is "confirmed," it changes the nature of the agreement between the airline and the passenger. Not an absolute change in the fare status, but not a "go to the end of line" situation either. Apparently UA felt the same in the OP's case.

One reason I feel this way is that there is that fare difference between a SWU-upgradeable fare and the cheapest fare available. I generally only book a W or higher if there is confirmable upgrade space at the time of booking, and am willing and able to adjust my travel schedule to accommodate this. (I realize many people don't have that degree of schedule flexibility, but then again I pay for my own tickets. If the schedule won't work and I really want to be in C, then I would buy C or Z.) But I often make the choice and pay the fare differential based on a confirmed upgrade and hope that things work out as planned. If not, then in my view it is a form of IRROPS and should be handled accordingly.

United has always said Confirmed does not guarantee a seat. And seat selection is only a request that they try to honor. OP still had a "confirmed" reservation in the class they booked, coach. They could not accommodate the upgrade, plain and simple. Yes, it was UA who screwed up more than once in this situation. Oversell, more showed up than they thought would, someone has to get bumped down. Guess what, it is the upgrader on a W fare. Then UA screwed up by being pushed into having a supervisor oversell Y on a different flight just so the OP could get an upgrade on that flight and worse, jumping the queue over all the people that booked THAT flight and played the game it is supposed to be played. Stuff happens and people get downgraded. I have ben downgraded and would never think to pull a stunt like this to pass my misfortune on to another person. This world has gotten so "me" oriented at the expense of everyone else it is sickening. I do hope bad karma strikes the OP and they are the recipient of losing the upgrade to someone who pulls a similar stunt. But alas, that would not work, they would just call UA and b*tch and moan and whine. Hopefully UA would hold their ground a second time.

The 12/11 SWU reappeared in my account due to a "feature" of UA's IT infrastructure. The RCC agent at NRT asked how I was supporting the NRT-ICN upgrade, and I said "the same SWU that got me here from SFO." Even after that, somehow the SWU was not pulled. I've also had a number of CR1s reappear this year after being used.

I have no more flights this year and UA is no longer extending SWUs, so someone in CC is going to get (or at least try for) a free upgrade.

The 12/12 SWU was deposited before the whole saga even started. I did not ask for it, and it would not have been my first choice of compensation. Do you want me to call up UA and ask them to remove it?

The hyperbole doesn't seem helpful here. The OP had a reservation for NC, and UA should honor that reservation -- which they did by shifting him to a flight where they could honor their commitment as best they could. Just as they wouldn't allow a reroute on a W-class fare without fee but would in the case of IRROPS, they appeared to have applied the same approach and common sense.
I disagree that the SWU wasn't 'sold'. It was exchanged for an expectation of service. If a downgrade needs to occur, then it should be handled with compensation unless a suitable option for rerouting is available -- in which case, no compensation but you get rerouted.

I've been very high on the upgrade lists and seen people appear to clear without being on the list, or clear from behind me. If they've a genuine 'inconvenienced customer' reason to jump, then I don't care. That's how the upgrade game works.
I agree that nothing is confirmed in the cast-in-stone sense. However a confirmed-in-advance upgrade should be as good as a confirmed C reservation in my view. It's been paid for, and UA has made the commitment to get the OP there in C, if possible. If they can't meet that commitment then downgrade compensation, or a reroute on UA should occur.

Interestingly looking at an upcoming itinerary, there is no confirmed seats in coach for me any more -- only in NC. Taking the scenario to the extreme, if UA downgraded me from C to Y, I would possibly displace someone else with a confirmed Y seat - or lose my confirmed Y seat. I'd expect UA to reroute/reaccommodate me if they can, or compensate me (and the hypothetical other pax too!).
Wow.
Makes no difference to me. I was really just making the illustration that 'double compensation' shouldn't occur - C reroute, or SWU return + complimentary SWU.

I can see how the reroute could cause SWUs to be erroneously returned, although maybe with UA's audits they'll catch it. Who knows.