You are correct. Anybody displaced from their current bid can bump into that position until the point of him getting bumped and the next junior pilots seniority numbers takes his place. Taking fences into account.

It's a fair way of letting seniority prevail and protects the seniority rights of all pilots. The downfall is that as long as a very junior pilot stays in that position with a lot of displacements, more senior people in positions that are not being displaced can't bid into a position that's rightfully theirs by seniority. Over time the senority list does right itself as we see today with bids, displacements and bumps.