If you keep the same seat types and number of seats (or less) you wont pay anything. This update was awesome as for years each cabin modification (expect flight attendant) made on pay for the entire cabin!
When does the new configuration (i.e., same seat type but less seats/more leg room) take effect?
If it takes effect immediately, but old config is fully booked, one will take a hit on 'cancellation' of the shortfall in seats upon re-configuration, right?
You have to install that new configuration. New flights booked after the install will use the new config, any flight already instanced, will still use the old config.
Instead of going less seats more leg room, I would rather get better seats. You gain much more from getting better seats which include more legroom anyways.