Well, I went ahead and did the upgrade in my lab. It took about an hour since I encountered some problems. First, I followed the release notes (ensure enough memory, enable SNMP, etc.) and made sure all bases were covered. I then created an IOS config to a .cfg file and .txt file with the manually filled in passwords, WEP keys, etc.
Then, I modified the task source to take the config from my .cfg file and the destination to my AP350 device. After starting the task, status became "Checking Device Status". It stayed there for about 20 mins before timing out. The log revealed that there was a problem accessing the tool's TFTP server. Since I used a Windows XP laptop to run the tool, I figured it was due to the ICF. After turning off ICF, I tried again and the image was uploaded to the AP. The status quickly became "Checking Device Status" however and remained there for a while. After another 20mins, status changed to "Complete". I was then able to ping the AP. I tried a client connection with MIC/TKIP/WEP and all went well.