Seems Q is enhancing their profits once again at the uneducated customer's expense - certainly not an ethical approach? Misleading/deceptive almost?
You could argue the same thing about opening a points store and selling items for points, which is poor value for money. Same thing about having the Points Plus Pay option. Or even the bid for upgrades option. So what? A lot of business profit is about taking advantage of the incompetence, inconvenience, ignorance, incapability or laziness of others. If you think you are so aggrieved about it, go write up a complaint to send to the ACCC or your local competition commission.
Incidentally, this would appear to be the only way to possibly muscle in an international W or J seat without needing to purchase a better than Red e-Deal fare.
If you could see the W or J availability, of course you would be better off grabbing that seat rather than play this upgrade path. Alternatively, if you, for whatever reason and out of necessity/desperation, book a Y fare, you could keep watching the W or J availability and then jump on it, paying the change fee, when it opens up.
However, if this never comes through, then if you really don't want to spend your time in Y, then you could lodge an upgrade and possibly be able to avoid that. By that point, however, it's probably not too likely. And if you were a WP who might have had a good chance of getting an upgrade, then you might have had a good chance to request the opening of a W or J seat by calling Qantas in the first place. More so if you were a P1, as they can book awards in limited revenue buckets.
If you were a SG then you might have some chance of getting one of the last seats available for upgrades, though suffice to say there would be some reflection as to whether it was better to just have paid the cash differential between the sale fare (or rather, the residual cash component of the Classic Award) to the lowest available upgradeable Economy fare, compared to fronting up the points for the Classic Award base fare. For PS and lower, the chances of netting an upgrade are likely very low, especially NBs, so those Bronzes on "huge stashes of points" for whatever reason will still not be any sort of significant threat to higher tier members who rely on upgrades.
I'd say this broadly has limited application in terms of value, but I could possibly envisage some people will try it out due to desperate circumstances.
Putting aside the poor economics, I don't know if this system can be used to improve the chances of netting premium seats for those who normally travel in a group more than one person.