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My steps for recreation are:
1. Declare Database resource "A" with alias "C"
2. pulumi up
3. Modify code to declare database resource "B" with alias "C"
4. pulumi up
5. Approve changes -&gt; error

And I understand my failure.  Apparently the process should of been:

1. Declare Database resource "A" no alias
2. pulumi up
3. Modify code to declare database resource "B" with alias "A"
4. pulumi up

I'm not sure I follow. You're trying to alias between _*two*_ different resources? I'm not sure that's supported to be honest.