I've upgraded several packages (such as sawfish) beyond those supplied with RedHat7 or the updates ftp section. Up2date now tells me that I should install a sawfish-0.32 package when I have 0.33 installed already. I know I didn't use a RedHat produced package, but up2date should still pay attention to the fact that I have.
The red hat versions have higher "Epoch" versions than the packages you have installed yourself, and epoch numbers get a higher weight than versions, so our packages are considered newer.