I just came back from a 5-leg trip, 3 legs of which I booked on AA with Avios. In FLL they gave me no problem at all, but in LGA and DFW the ticketing agents said that they couldn't give me a free bag. "It's not working on the computer, and I could get in trouble, blah blah" or "you only get a free bag when you pay for the ticket with the citi card", etc. "Just call Citi and they'll take off the charge for you". (!)
I had called AA and put my AAdvantage # on the reservations, and my AAdvantage Citi card had my AAdvantage # on it as well.
On the phone with Citi now. Hope it works out...