I would seriously doubt it, you don't own any of the titles you access via Game Pass, you are essentially renting them, and they can be pulled at any point at the descretion of MS. I'm pretty sure you would actually need to own a copy of the sim in order to be able to upgrade it. I imagine that upgrades for purchased copies will be avilable from the storefornt, but MS have said it will be more cost effective to get the version you want rather than upgrade at a later date.
You can buy DLC for Game Pass titles. I own the Forza Horizon 4 Ultimate Add-Ons Bundle despite not owning the base game.
The statement on the FAQ is pretty meaningless. All they have to do to make it true is sell the DLC for £70. That would make the UE £10 cheaper than buying the base game and DLC. But if you have Game Pass, you'd save £50 by just buying the DLC, and would simply have to accept that if the base game drops off Game Pass, then you'll need to buy it. But that moment could be years away, by which point the base game may be quite cheap. As an Xbox Game Studios title, I'll be surprised if this isn't on GP for ages (I can't think of an Xbox published game that has dropped off yet TBH).