This will work (I've done it personally), but you need to have some other license key for it to work. Once Windows is done upgrading, you can go to the System control panel and change the activation key to your MSDN one, and activate with that. I experienced the same issue a while back. I don't know why the initial upgrade reported a failure, but anyway it all seems to be working fine now.
The only solution I've found is to use a regular upgrade or retail key (if you have any from other installations) to initiate the upgrade process, but choose not to activate automatically. It turns out that the upgrade to Ultimate seems to have actually worked, which is why Anytime Upgrade complains that my license isn't valid for further upgrades. However, as mentioned, you cannot do an anytime upgrade with an MSDN key. With some MSDN keys (it's unclear why this occurs with some and not others), you may be informed that an upgrade installation can only be done with Windows Anytime Upgrade, not from the DVD. What "riskiness" are you referring to? If you use genuine media with a genuine key from MSDN, and do an upgrade install, there shouldn't be any significant risk. You can still perform an upgrade installation, it will just be running from the DVD you burn. If you have MSDN access, you should be able to download a legit ISO from Microsoft directly. You have to find regular installation media.
You can't use an MSDN key for an anytime upgrade.
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