I am either doing this wrong or something is very troubling.

First:  My game has HUNDREDS of meshes that I created in CC3 and then imported into my Unreal game.  So anything that requires me to do a "for each character..." thing is not workable.  I hope that's not required.

Second, the instructions for upgrading Auto-Setup tell me to "Delete very CC Characters which has "CC_Auto_Setup_Material_Instances" folder created by Character Creator & iClone Auto Setup."  I don't see any such folder.  (I never imported meshes from iClone, just from CC3.)  But I can't rule out the possibility that maybe there was such a folder at one point but then I reorganized materials into other folders and deleted the one named CC_Auto_Setup_Material_Instances.  How can I tell whether I'm supposed to delete a character if perhaps that folder no longer exists?

Third, with respect to deleting characters:  HELL NO.  Like I say, I have HUNDREDS of meshes.  These meshes are referenced in numerous data tables, data assets, and other places because I have a modular character system that allows me to change a character's armor, etc., so there are many references.  Deleting these meshes, re-importing them, and then trying to re-trace where each mesh was referenced so I can replace it with a new reference is not workable.  Please, we need an upgrade path that does not require us to re-do a huge amount of work.

Fourth, the instructions say to "Delete the "CC_Shaders" folder under Project > Content."  But when I try to do that, Unreal points out that I'm about to delete assets that are referenced in various materials instances.  (Lots of them.)  Am I supposed to delete all these material instances?  Or maybe replace the references to the shaders with null ptrs?  If I do that, am I going to have to come back later and replace all those references with the new shaders?  Again, this is a large volume of assets and references, and deleting/re-creating all those references is really not a practical solution.

Can someone please provide a WORKABLE way to upgrade Auto-Setup in a significant project that has hundreds of existing meshes and references to those meshes?  Deleting everything and then re-doing it all is not realistic.

There probably is a workaround, but this is just a quick cursory look at what you are experiencing.  It falls within the real of "best practices" and I have seen this before, where you are better off not updating parts of the paradigm while in production mid-project. 
It throws folder naming conventions off making things not usable....Better to start fresh on a new project with the updated parts.
I see this as an Unreal limitation, similar to an Apple limitation.  When you update iOS and apps midway through a project, it can screw things up unfortunately.

Thanks, Tony.  Perhaps the best approach would be for me to import new characters into a new project, and then migrate the character from that project to my game?

I totally get not upgrading software mid-stream, but as a solo dev making a pretty big game that has already taken several years, I run into problems if I don't keep the software reasonably current.

That's what I was going to do as I am in the same situation - Create an empty project, add the plug-in and then migrate the characters after I import them   (I'm assuming the only negative is that you'll have two sets of shaders).

I actually had to do that anyway unless Reallusion fixed the Plugin so that it works with projects with BluePrint and C++ code.  It didn't work with C++ projects years ago..