I'll answer my own question for others benefit. I was able to successfully upgrade UZB from firmware 5.34 to 5.39 using Z-Way server and the all
token to first downgrade and then upgrade following this path.
5.34 → 5.33 → 5.27 → 5.36 → 5.39
My bootloader version is 40196 and I did not upgrade the bootloader along the way, I started and ended with the same bootloader.
I did a ResetAPI followed by a ControllerReset after each firmware downgrade/upgrade to ensure that I had a clean start. I also disabled all zwave device (unplugged/removed batteries) to ensure that any stray packets didn't interfere with the process. Be sure to backup your configuration/network before updating the firmware.
After upgrading to 5.39 I'm now able to use the promiscuous mode in Z-Way zniffer to capture packets on the network (although it misses some packets)
I did get a note from support, so those with firmware under 5.24 may want to pay heed to this.
there is a batch of sticks with "dead-end" firmware and a slightly modified board topology. But given the fact that such sticks are usually impossible to upgrade above version 5.24, then you most likely have a good stick for which this operation will be possible.