A few comments
1) No matter what the spend category, there are cards where you earn meaningfully more than any Citi AA card. You say that it doesn't make sense to but general spending on a Mileup card. Well, it doesn't make sense to put American Airlines spending on any AA card (Amex Platinum offers 5x), doesn't make sense to put restaurant spending on the Platinum (Citi Prestige offers 5x, Amex Gold offers 4x, Chase Sapphire offers 3x), it doesn't make sense to put grocery spending on this card (Amex Gold offers 4x). Unless...
2) Your primary goal is to spend to earn AA status and miles. If so, I would argue the lowest opportunity cost may be putting general spending at 1x on this card (or any Citi AA card). If I were trying to earn AA status, I would spend on general purchases first, because the opportunity cost is greater on airfare, dining, etc. You lose 2 transferrable points by putting grocery spend on this Citi Mileup card, you only lose 1 transferrable point by putting general spending on a Mileup Card
3) I have the Citi AA Executive card - AA domestic lounges simply aren't worth the fee for me. I'm downgrading that card to this card. I already have this card too, so I probably will have multiple versions of the Mileup. This is an excellent card for those that want to spend some to maintain AA status but don't want to pay a fee. It. may be their best card.