I've been on plenty of German trains that had indicators over the seats to say for what segment they were reserved. On December 26 of 2001, I was on an ICE from FRA to Karlsruhe. It was holiday, the second day of Christmas, and the train was packed. We had to stand in the aisle at first. We could tell by the indicators over the seats that few were actually reserved, just already occupied. When we got to Mannheim, people got up to get off, and, before more came on, we took two of the unreserved seats.
In November of 2008, I had tickets for three legs (IC/ICE/IC) of long distance trains with a Dauer-Spezial (now SparPreis) ticket, along with seat reservations, which were at the time included with advance purchase tickets. Due to wheel problems on these trains, different types of carriages were being substituted. On some, my assigned seat didn't even exist.
The first train, an IC, had a different type of carriage, but it was only partially full, so I had no problem finding a seat. The second train, an ICE, was sparsely filled. I missed the last train, an IC, due to my connecting train being late, so they put me on an ICE, without a reservation, but that train was only partially filled, as well.
The only problem I can foresee would be if you had reserved facing seats with a table between so, for instance, you could work with your computer, and your seats were filled by squatters and there were no other like seat combinations available.
I remember hearing a story years ago from a guy who boarded a train in Florence and found his reserved seats occupied. The occupants insisted that they had the seats reserved.
When the conductor was called, he looked at their tickets and reservations and remarked that they were only valid to Firenze!
"But we bought tickets to Florence", they argued.
"Yes," the conductor told them, "but Firenze is Florence, and we just left it."
At that point the squatters insisted that the engineer back the train up to Firenze so they could get off.