PJ upgrading consumed a Levelled PJ for one Level

I don't remember where exactly I saw it, but I'm fairly sure it was stated that a levelled PJ (or perhaps it was just referring to quarries at the time?) would not be accepted for increasing the level of an already placed PJ, to ensure people couldn't accidentally lose levels and the operation could simply +1 if valid. At the end of last wipe I'd  been given a Level 3 and already had a Level 2 running, so I thought I'd test that. Clicking upgrade did consume the level 3 PJ, and gave my existing PJ one more level, up to 3. I had not verified, by placing it down first, that the second PJ was indeed a 3, but it came from a trustworthy source. Am I interpreting the intended operation correctly in thinking that this should not have happened, that clicking upgrade should not have done anything?