I have something like this:
Unfortunately you cannot run an elevated custom action before RemoveExistingProducts with your current configuration.
Some possible approaches would be:
Move RemoveExistingProducts right before InstallFinalize. This solves the custom action problem, but other problems may occur since this approach has many restrictions (the components need to maintain their names and GUIDs between versions, your custom actions should be aware that the upgrade is performed at installation end etc.).
Create an EXE bootstrapper which fixes the old installer before launching the new MSI. This bootrapper can require Administrator privileges through a manifest:
http://msdn.microsoft.com/en-us/library/bb756929.aspx
Repair the broken MSI by using this method:
msiexec /fv
When your new package runs RemoveExistingProducts, the old cached MSI should be fixed and it should uninstall correctly.