Octopussy - Your ticket, once you paid for the upgrade was for travel in a class higher than the class you actually travelled in. They didn't have to offer you an upgrade but they did and you paid for it.
I normally don't favour the 'compensation culture' we see often. However, here I think KL/DL have screwed up royally. They promised you something they couldn't deliver on a flight that was oversold to boot. If they can get away with it, they will do it again.
I suggest you contact the marketing carrier (regardless of whose metal was used) and point out that you were involuntarily downgraded and that Regulation 261/2004 applies to downgrades. (There is no extraordinary circumstance defence for downgrades).
You should also point out that the Regulation requires them to advise you of your rights at the time the downgrade took place. They failed to do this, hoping you would go away without causing them any grief.