Victoria, I was holding out hope that you had seen this problem. It is strange. Even if when the upgrade fails due to the log filling up and I alter the database to set it back to Recovery mode Full, [and take a full backup] I can watch the SQL Log file and see that right after I restart the upgrade the company database is set back to Recovery mode SIMPLE.
Our company database is so large that creating a transaction log large enough to do an entire upgrade without backing up the logs is just not practical. This behavior is baffling. -- I hope there is someone out there that has successfully dealt with this problem.