This is not the officially supported upgrade procedure, but I understand you need to do it this way. I would advise you change few steps in order to check if the problems come from this remote upgrade procedure.
What project manager does is add the new Sitefintiy assemblies(4.2.1650) to your project bin folder.
1.Create a backup of the current production database and project files.
2. Copy the contents of bin folder of a blank Sitefinity 4.2 project
3. Place them in the bin folder of the project have on production(copy and replace)
4. navigate to the backend.
If you still get 301 errors then the upgrade went fine and the issue must be caused from something else.
Edit titles and properties of a page and see if you have additional url`s for this page that are the same as the page url. Removing them should fix the redirect.
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