Are SOs currently being upgraded in CX or is there a complete standstill?
The upgrades are underway again, from what I understand they are looking at around 26 courses (52 SO upgrades) this year. The SOs are being replaced with CEPs, not DEFOs.
S/O's are not allowed permanent bases
That is not correct, if an SO has been assessed, they can apply for a permanent base and take up that base when they have been upgraded.
Can CX then hire DEFO or would they have to give all remaining SOs bypass pay if they do?
CX can only hire DEFOs if there are no "suitable" SOs, regardless if they have slots available or not. CX is a Hong Kong based airline, that has some of its pilots on bases, not the other way around.
CX can crew its flights out of HKG, it does not "need" bases, just look at how quickly they closed the AMS base this year.
CX has "got around" this is the past by simply not hold assessment boards despite having a large number of SO meeting the requirements. The labour tribunal said this practice was to stop, every SO would need to be assessed before hiring a DEFO.
The last round of DEFOs earned the DEFOs a bad name amongst the trainers, they were less than impressed with the standard that a lot of the people had. Needless to say, a number of them no longer work at CX after being chopped.