I just solved this problem (I was busy the last few weeks and just got around to looking at this.)

Quick recap:  When I was originally upgrading, I had taken the install package and uploaded the unzipped files to my web server, after updating config properly.  The install process would not start.

Quick Solution:  The simple fix to make this work was to install it on local machine, with the config file pointing to the hosted server SQL database. ( This only works with SQL databases that are also accessible outside of the host web farm.)  I went to the localhost directory, and after some delay the install/upgrade kicked in.  So even tho I am running on local machine, I am upgrading the server Database.  I saw at the end it moved some zip files...so...So I then ftp'd all the files up to the server.
I did recieve an error first time I hit the actual hosted site, but refreshing cleared everything up!!

Once I thought this through,  I was very impressed with how cleanly the local install fired up, and how cleanly it worked on server after upgrading.

My previous botched upgrade had my site running, but the edit functions generated errors... Now it all works liuke a champ... as does the Orizonti Newsletter control that I had added, which required 3.22 and was failing with my 3.1