The way it was explained to me is that in your Multiple GUP rule set, it'll attempt to find a machine to use as a GUP that matches your criteria and is on your subnet.  If there is no such machine, by design it will default to SEPM.

If you have mutliple GUP's on a subnet and the first one it tries is busy or unavailable, it'll try the next one.

You can set it to go to another GUP on another subnet using the field at the bottom of the GUP rule setting screen.

You can also tell it that if it finds a gUP, but the GUP is busy updating other clients, how many failed attempts before going to SEPM, or you can tell it to never go to the SEPM and just wait until the GUP is ready for you.

Blenky,

This works very much similiar to location switching based on registry key.

You would need to understand that even if GUP is set for a group, the client still reports to manager. There is some sort of communication between the manager and the client, even if they get updates from GUP.
When you set GUP based on registry, the client registers itself to manager as a GUP. The other clients in the next heartbeat interval, they get the new policy with the location of the GUP.
You may want to refer http://service1.symantec.com/SUPPORT/ent-security....

In case of multiple GUP, a GUP selected randomly.

Aniket, I actually saw your videos earlier today, fantastic stuff.  Thanks for taking the time to put those together.