This does look similar to the ACX issue I saw. Your main system partition is basically full. Verify that there are no user created files there that can be deleted. If not, you will need to upgrade from an external boot.
You may want to open a JTAC case on this one for investigation. This process worked for the ACX issue.
Create a bootable usb (you might just be able to do a snapshot to usb)
Boot to the usb and install the upgraded OS with the format option to the internal media