not quite! When you upgrade a star potion it gets dissolved - it's a higher level as normal, but it can no longer combine and doesn't take up any space. You should be able to tell what ingredients have been dissolved by the tint that shows up in the background of your concoction
yeah the reward screen is one of the rougher parts of the project - in the long term I could see me giving it a total overhaul, maybe turning it into more of a shop, but in the main time I'll try and give it a touchup to make it more stable