Provided nothing breaks, then yes, do-release-upgrade can do the job. (dist-update does not upgrade to a new release in Ubuntu).

I have a bad experience with this, especially upgrading one LTS to another LTS. Clean install was much more reliable.

I have never had a problem on a release upgrade. It's one of the reasons to like Debian based distros IMHO. I suppose that may in part be because I typically waited for a while after a new major platform release to move the the next release.

The 10.04 to 12.04 upgrade has broken audio on my xbmc (now Kodi) box. Audio is pretty fundamental thing on a such box. I've spend a day trying to fix it, until I threw in a towel and reinstalled it from scratch.

The 12.04 o 14.04 upgrade was also broken. I don't remember details, it booted, but the dependencies went weird. I wasn't trying to fix it anymore, just straight reinstalled from scratch.

I haven't upgraded it to 16.04 yet. I will try, what will happen, once Kodi stops supporting 14.04.

You should use the upgrade system provided by Ubuntu ('update-manager'), it knows more about the changes than the standard 'dist-upgrade'. You can also run it to test what changes it will make.

Second, if you are using PPA's you are much more likely to have problems. There's no way to test all the inter-relations between packages that are outside the central archive. If you have packages that have upgraded fundamental packages in Ubuntu's Main archive then it's likely to break.

I mention this because you're talking about multi-media.

In general, it's best to remove PPA software before you launch the upgrade, in fact it's a good opportunity to remove anything from the system that you don't really need: for example for my 16.04 upgrade I removed the C++ environment as I'm not using it.

The only third-party ppas were team-xbmc and nvidia driver. I think that the more likely reason for breakage was, that it is not the desktop installation from live cd, it is minimal installation from the mini cd and then hand-picked packages. It has X11, but no desktop environment, for example.

I guess no-one (or fewer people) were testing that configuration. I wonder if you could use a VM or similar to at least test the upgrade before you do it. I do quite a bit of cleaning before an upgrade, but hitting the button to 'do it' is always a bit of a stressful moment!