Shouldn't the upwash on an airfoil increase the effective angle of attack? From what I understand, induced drag comes from a reduction of the effective angle seen by the airfoil.

However, from wind tunnel smoke visualization, we can see that the streamlines at the leading  edges and stagnation point tend to "go upward'. Which is the opposite of what the effective relative wind is supposed to be and do.

Is this "upward tilt angle" of the streamlines, the result of suction from the upper surface minus the induced angle?

I've included two pictures:
The problem is the true AOA varies depending on where in the flow you measure it.  So what point do you use?  An inch forward of the LE?  Farther forward?  Higher? Lower?  

Better to use a consistent value that is independent of the local flow variations in the upwash by using the angle of the chord line to the free stream.