I would EXPECT any airline to put a paying passenger in First Class over any non-rev. Especially one from a competing airline. That's just the smart thing to do. By upgrading a paying passenger, you can probably make a loyal customer for life--especially one who is already a frequent flyer on the airline.

I understand the "take of of crewmembers" idea, but I would passionately want my airline to take care of those who pay the bills. That gives the employees better pay/benefits and/or fewer furloughs etc..