Let me answer two questions:
1) how do you convert a paid 'full' app to a free 'lite' app with a non-consumable IAP upgrade to the 'full' version and credit users who bought the original 'full' version with the IAP rights? - You can do that by checking the original_appliaction_version in the receipt that comes with the app. You can do that by telling the user that if they purchased the full version they can get upgraded automatically by tapping a button. After they tap that button you refresh the receipt and then either:
a) decode the receipt in teh app (that's hard)
b) send the receipt to your server and then to apple for decoding (that requires a server)
c) send the receipt to apple's servers for decoding (that is a little less secure that #1 or #2 but it's easy)
2) can you use an autorenewable to charge for the upgrade? - most likely not. Autorenewables are for stuff that changes with the autorenewable time period. You will most likely be asked to convert that to a non-renewing subscription. You can certrainly provide the upgraded rights to:
a) a user who purchased the earlier version as shown by their original_appliccation_version field in teh receipt
b) a user who pays a one-time fee by purchasing a non-consumable IAP
c) a user who periodically pays a fee to upgrade for a limited period of time by purchasing a non-renewing subscription IAP