You can indeed continue to upgrade from one AP to the next.
And for a complete answer with all the pitfalls:
There is no pro-rating, you will pay the full amount.
You won't get retroactive Premium discounts.
Your expiration date will stay the same.
So if an opportunity comes up for a trip during a blockout date, you can either buy blockout passes for the date(s) at $40 per blocked out day, or just upgrade if you think you'll go on enough blocked out dates to make it worth it. And if you're big souvenir-buyers, then that Premium discount makes quite a bit of sense!!!
For me, there have only been 2 days where I *wanted* to go but were blocked, and that means "only" $80, vs the $140 it would cost me to bring my deluxe up to premium (our deluxes were 239 vs the 259 right now, so with premiums at 379 the difference is big), and I don't anticipate more blocked out dates for me, so it wouldn't have made financial sense for me to have a premium this year. (next year, though, I'm getting the Premium so I don't even have ot think about it, or sit out those dates like I did this year)