I think there's 2 different things being discussed here.
1. Complimentary P1 upgrades
2. P1 upgrade certificaes/credits(whatever you want to call them)
(1) currently exists as an undocumented benefit, allegedly every 10 flights but hardly set in stone
(2) is something that has been discussed here as a wish list item (BA GGL for exmple provide a number per year I believe.
QF could easily offer P1's (2) and have it a published benefit - much like the US carriers do with their SWU's and the like. They can be capacity controlled any way QF likes - indeed they could just add it to the current system as a method of payment for an upgrade request and thus it still comes under the same umbrella, or they could oiffer a special CONFIRMED upgrade that books into a revenue bucket... maybe at the 5k SC level or something.
The point being that say QF gave 2/year of these "Upgrade Credits" for say a one cabin upgrade on a QF flight, you put your request in as per usual just opt to use a Upgrade Credit instead of points. If you have one voilia it goes in. if it clears, you essentially have a free upgrade courtesy ofQF, worth up to say 72,000 points. That would be a real benefit IMHO. That's not destroying revenue or yield management but providing for free upgrades that are quite different from (1) which are more or less "you're on am empty flight in the next cabin up, 24 hours out we'll throw you a bone" type nice upgrades, but maybe even ones you don't need or want (eg: I wouldn't pay for an upgrade on MEL-CBR, but if they put me in J for nix I won't complain.. but I *would* pay for J->F on SYD-DFW and if I could get that with a "free credit" well yes please save me a bunch of points and feel QF wants to reward my loyalty.
QF choose to not provide (2) or a variation on this even when other carriers like BA do. That's their call, and the response quoted above from the SST goes to explain the issues with providing (1) because that's what they do currently.
I've had a couple of the P1 complimemtary upgrades (which some consider to be op ups, but I do not, as they are totally different in execution) over the journey and it's been great, but I NEVER have counted on it (Well OK, this one time, not at band camp I looked at the loads on a 330 on a Sat arvo and figured chances were good I'd get one on MEL-SYD and was not surprised when I did but I would have been happy to stay in 23A if not. ). I kind of consider these types of upgrades as a bit like te event invites and stuff... nice to get, not expected.. but not something to be expected.
If QF wanted to show more value to P1 in a defined sense, I reckon they could implement something like (2) with minimal impact on yield and revenue if tied in to the current upgrade system. P1's would feel there was a real benefit, specially if you could use one of these things on a long haul, save some points and basically have something the other tiers don't have. And you know what, there could even be some P1's out there who would never use these things (eg if their travel is already always in the highest cabin there is) and again QF loses nothing.
I just think in discussions about upgrades for P1 members it would be good to be clear about what we're talking about - what currently exists vs what we'd like (or at least I assume most of us would)