J3,
Yes it can happen. It has done so in QL. Seniority (in QL) allocates who amongst the SUITABLY QUALIFIED applicants gets the command.
In Eastern, there are some FO's who've got a higher seniority number than some Captains. It's not a normal situation, but it can happen. The reason for this is that the guys who got the Captains upgrade had the CASA and company min requirements and the more senior guys didn't.
Many of the Trainees had under 400 hours TT when they joined. These guys (i.e. <400TT) wont have 1000 TE yet. In 12 months time they might just have enough hours for their ATPL, and then more time before they reach the company requirements.
So it's entirely possible that some of the high-timers who've joined in the last month or so could become captains when people who've been at the company since mid to late 2008 will still be FO's.
HappyBandit, if you're in EAA, you may want to re-read the EBA. Clause 57.10 has the details you're looking for. I don't have the Sunnies EBA handy, but I'd imagine there is a similar clause there. Also, you may want to look at the C&T manual to see how many hours you fly on the captain upgrade.
Cheers,
DIVOSH!