I took PP's post to mean that you will pay rack rate for preferred if you upgrade. Not that you would be subject to rack rate on your existing reservation retroactively. All promotional discounts have a certain number of rooms allotted and once those rooms are gone, that's it. If those rooms are gone when the OP is trying to upgrade but there is still preferred availability, he or she would then have to pay rack rate for the upgrade - whatever the difference is to the total for the preferred room. Not the difference in the entire amount.
For instance, if OP is paying $199/nt with their discount in a standard room and a preferred room is $299/nt at rack rate, and the discount made preferred $250/nt, OP would have to pay the difference at $299/nt as opposed to $250/nt. So an additional $100 a night rather than an additional $50 a night.
I agree that its certainly something a manager could adjust at his or her discretion, but I wouldn't count on that when doing my budget for the trip.