In answer to your questions:
1- keep your pre-existing config.inc.php?
No, because unless I missed some other documentation nothing has been mentioned about doing that.
2- edit the settings in the config.inc.php.new manually and renamed it to config.inc.php?
I did rename the config file but not the one I previously had only the newly supplied one.
3- re-run the install step?
No, because the upgrade documentation told me to remove that folder.
I'm sorry I am only new to this product and am relying heavily on the supplied information / documentation to find my way.
So, basically what you are saying to do is:
Save the existing config file that resides on the server?
Upload all the new stuff?
Upload the saved config back to the server?
If so, could you please add that to your upgrade documentation,