I have this same problem with a newer 4300C and have an older 4300C that updates just fine. Somewhere in the hardware development timeline they must have changed so that cameras revert to the prior firmware version automatically, which is good so your camera won't brick, but bad because it's impossible to upgrade. Wish I knew. You've taken the troubleshooting steps farther than I have with monitoring the upgrade process via telnet. If you keep digging please keep us posted on findings.