You are ABSOLUTELY "ON TARGET" Visvanath,
I have headed down several paths and found, despite any and all other published documentation relating to this matter, the one matching the "work flow" you have outlined produces the most stable all-around migration path, "HANDS-DOWN!"
Nevertheless, regardless of which of the prescribed migration paths one chooses to engage there are Plugin (Standard and/or Non-Standard) Updates that must be applied (which ones and the exact amount vary depending on the "robustness" of the Moodle Installation, thus, the number of required updates could range in the hundreds).
Now here are the million-dollar questions:
1) Is it necessary to apply each and every update (Standard as well as Non-Standard)?
2) Do these updates have to be applied manually (performing a "one-by-one" search and then applying each individually) or is there a way to automate this process such that a bulk update can be performed for the plugin updates (Standard, Non-Standard or both) required to proceed successfully (even if this update mimics a Word Press, check box, type of process)?