Let's say you want to upgrade items to Rare.

You have Assembler -> Upcycler -> Upcycler -> Container. For the sake of brevity, I will call the two Upcyclers A and B. A makes Uncommon B makes Rare.

When the container fills up, B continues to make rare items, and it fills its 16 slotted inventory. When it fills up, A still continues to make and push items into B, despite it being full. I sped the game up 50x to see if it would ever stop, it did not. The items did not backup into A's output, they just kept being pushed into B. I suspect this will chain upwards into other rarities too.

This makes automating qualities a big fat nightmare, as now I have to manually turn off the feeder arm from the assembler into A when I have enough, then turn it back on when I want more.

when i made this mod i did not predict people would deliberately fill all the output slots of the upcycler, the mere idea of 20 full slots makes my skin crawl :D

Well that isn't the problem, the problem is there's no way to tell the upcycler to stop. I only want it to fill 1 slot of the box of rare items, and then stop upcycling. There's no way to do that for either A or B... It just keeps consuming infinitely.

just run a wire from the output chest to the inserter at the beginning of the chain

Well, that's one way to do it, I suppose.