U4 soft pedal dysfunction?

Works fine here. Did you try increasing the Soft pedal slider?

Also, soft pedals work differently in upright pianos compared to grands.

Can't say that it does, it does give an obvious change in sharpness of the sound.

Listen to this example. All 5 notes are velocity 96, default U4 Midnight preset. First without soft pedal, then with soft pedal three times, with Soft pedal slider set to 0.25, 0.5, 1.0.

http://www.forum-pianoteq.com/uploads.p...0pedal.mp3

It all works.

The first thing to check is whether the MIDI events for a pedal are being registered.

In the "options" window you'll see a tab for MIDI.  In that window you should see a MIDI event being reported whenever you press or release your pedal ( regardless of whether a note is being played at the time ).

That report should give you the controller ID and the same window will list ( and let you change ) what controller is associated with what effect.

Have a look at that to see if your pedal is being detected and is associated with the right effect.

By default, the U4 is equipped with a "Celeste Pedal", also called "Moderator", very common on upright pianos (see the tooltip, and see the various possibilities - including a "Soft Pedal" - via a right click on the pedal). It consists in a piece of felt which is inserted between hammers and strings. The "Soft pedal" slider you are moving in your video has no effect on the "Celeste Pedal", it affects only the "Soft Pedal". Notice however that the "Celeste Pedal" is progressive w.r.t. to the position of the pedal.