They probably don't know either.
I expect there are three warring factions within Nintendo right now. There's the old-school/classic Japanese (+Jewish influence) "fuck everyone who isn't us, charge them for everything, nothing for free ever, squeeze them hard, bleed the stones!" management types. They're the ones jewing everyone as much as possible. Then there's the hardware boys who want to show off Switch 2's capabilities to as many people as possible (these are the ones trying to get old games upgraded for S2 free for existing players). Then there's the third group -- the software boys, who want to give players the best games they can, caught in the middle between the other two groups and two conflicting directives -- "make it look as good (and run as well) as possible on S2 so we can charge for the upgrade" and "do it quickly/cheaply so we can justify making it a free upgrade".
There's got to be active dissent within the corporate structure at Nintendo resulting in this damn-near schizophrenic indecision on what to upgrade for free vs. what to gouge people over. No other explanation makes much sense.