The Factory Reset before and after the database replacement is probably not mandatory, but is a good idea (I did both). This should wipe out all the books loaded - it definitely clears the database and wipes books loaded via Kobo desktop. It seems inconsistent with sideloaded books (Calibre, ADE, drag & drop), so I removed everything before the first factory reset, then reloaded stuff after the DB replacement and factory reset. I did not need to do a firmware upgrade.
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