My PE953 handheld unit bit the dust so I had to replace it only it had firmware v3.4 on it and wouldn't speak to my PE653 running firmware v3.1. So I finally sat down and figured out how to perform the firmware upgrade. Some observations for future intrepid souls who go down this route:
1. You really do need Windows XP 32-bit to run the Intermatic Firmware Updater. For this, I downloaded Microsoft's "XP Mode" installer, extracted the VHD file it contains, and ran it inside of Virtual Box.
2. You don't need Intermatic's Z-wave stick. I was able to perform the upgrade using an Aeotec Z-Stick Gen 5. It registers as a serial device and speaks the same Z-wave serial protocol. To make it work in Virtual Box, associate the Z-stick with a virtual serial port (eg. COM1). The Intermatic Firmware Updater won't automatically detect the Z-Stick but you can ask it to manually connect to the COM port, which will work.
3. I wasn't able to get the Intermatic Firmware Updater to successfully Include devices from its UI. So I took advantage of the Z-Stick's portable nature and built-in battery and manually included the PE653 to it's network. Once done, I plugged the Z-Stick back into the computer, selected the PE653, and successfully updated the firmware. This got me onto v3.4 so at least my PE953 and PE653 could talk to each other, but not Vera.
4. I called Intermatic and spoke with Frank about getting other firmware binaries to gain compatibility with Vera. He kindly sent me v3.3 and v3.7.13.
5. With v3.7.13, I was able to pair both devices with Vera running UI5 with Z-wave v3.2 but the PE953 handheld showed "Out of Range" and I was unable to pair it with or configure the PE653.
I haven't tried v3.3 yet but I expect it'll be the same.
The issue as far as I can tell is that when Vera is using Z-wave 3.2 it doesn't support secondary inclusion server mode so the PE953 handheld ends up as a secondary controller and is unable to configure the network. When I first set this up, I had Vera running Z-wave 2.78 but it would be too disruptive for me to go back and reset everything. I wonder whether I could remotely configure the handheld by setting the right associations or configuration registers but I don't know what I would set them to.
Anyhow, at this point I think I'm going to give up and just use the handheld separately from Vera.