I agree that this makes the most sense.
What you originally paid shouldn’t figure in except perhaps at the margins. What I mean is that if there are 2 sets of bids that result in approximately the same total additional revenue to Celebrity they might give the bid to the person with a higher Captains Club level or originally paid more for their cabin. However, this probably only applies when differences are small.
Also, as previously said, I have never been offered a suite when inside was booked.