Hi Rex,
I will try to explain you what we do. We prepare custom installation program, which do next tree steps:
1. DELETE files which will not be used in new version, including DLL in WINDOWS/SYTEM directory (if this is upgrade).
2. Update data file depend on our data-dictionary (if this is upgrade).
3. Install new files and DLLs; if file is available we not install it. (this is for both cases new installation and upgrade)
I hope this methodology will help you