Having spoken with my mate in Manning then to be promoted with a lowered med cat then you have to be employable within trade. Therefore if there are no vacancies at this time that can accommodate you fully in the trade (even within your medical restrictions) the desk will recommend that your full release to the PSL be held in abeyance until your next review. This decision is not made lightly, but in consultation with medical specialists, thus if they state you are likely to be upgraded at the next review then when this comes along and they revisit your case you will have nothing to worry about. If you are unlikely to be upgraded then they will go through the process again, weigh up the evidence they have available, what vacancies they need filling etc and then make a decision from there.
You aren't actually losing anything at the minute because you are not promoted, so I wouldn't get hung up on seniority and pay because you have not been promoted. Even if you had been fully released to the PSL then it could well be that the post they need you to fill wouldn't come up at the same time as those around you on the PSL so you would be in the same position. Remember they don't have to promote in numerical order, which has been quoted on this thread previously. Ultimately seniority is a minor factor that people get hung up and have no reason too.
In response to the person who made comment about getting upgraded for promotion and then downgraded, whilst primarily in jest I am guessing then caution is advised. If you do this and then cannot attend your promotion courses etc you will not get your LOS30 paperwork etc, etc, so a gamble to take and could come back to haunt you. More so these days when there is more scrutineering than ever.
Finally, it seems there a few people in a similar position as discussed above so at least there is parity of treatment going on for all across the ranks!