I do see what you mean, but for someone holding this kind of domain and looking to 'upgrade' there appears to be no real way to do so safely.
We have, as part of our purging, dropped a number of exclusively prov. domains, and yes, once they're dropped, they're converted to 2nd-level in the TBR (eg. we dropped imat.on.ca, which was picked up as imat.ca this week).
With respect to the "upgrade," it is supposed to work like this: the registrant co-ordinates with the registrar to cancel their provincial. Because of CIRA's hourly refresh on the database, the registrant can then have the 2nd-level reg'd without anyone else knowing about the domain being available.
I doubt highly if there has been a single one done.
I stand by my posts of when it was revealed (and not by CIRA) that the end of provincials was implemented chiefly by Rob and Paul, because bidding on prov. TBR's was much less than 2nd-level's because most schmoes didn't understand under the old system that they could back-order the prov. and instantly create the 2nd-level as well simply for the reg. fee.
(Old eg. cop.ab.ca [was owned by Canada Olympic Park in Calgary] was picked up by a certain extra-terrestrial at the time for $200. - what is cop.ca worth?)
At the very least, under the revised system, a present exclusive prov. domain should be allowed to create simultaneously the 2nd-level without canceling their prov.
It would be difficult to find a prov. that is not a very mature 10+ years old, with SEO love, emails for the business, etc.
Can they cancel all of this, and re-create it, and all of their emails overnight?
There would need to be a 1 to 2 year transition process.
The pea-sized brains at CIRA disgust me to no end.