So, it would appear that SyncPipes is 'only' checking to see if the material is in inventory, like it would for a wall, floor or ceiling. It's NOT checking the permissions level for the 'filter' restriction. As an example, if you set level 1 to 'wood', and they have HQM in their inventory, they can STILL upgrade to HQM, however.... They will not be able to add a filter, because they have gone beyond the restriction of wood.

Could you send me you config so I can test against it. Thanks

I've not been able to recreate your issue.
With the different levels set up I can limit the upgrade level on the pipes.

I am running with the following permission levels in my config:

  "permLevels": {
    "sticks": {
      "upgradeLimit": 0,
      "pipeLimit": 15
    },
    "wood": {
      "upgradeLimit": 1,
      "pipeLimit": 25
    },
    "stone": {
      "upgradeLimit": 2,
      "pipeLimit": 35
    },
    "metal": {
      "upgradeLimit": 3,
      "pipeLimit": 45
    },
    "hqm": {
      "upgradeLimit": -1,
      "pipeLimit": -1
    }
  },