I understand that this has been implemented awhile back, I experimented on it and I discover that 3* sets that upgrade to 4* sets is weaker than an original 4* set for set bonus.
The reason is the 3* set thats get upgrade to 4* set still retain the 3* set bonus.
A suggestion would be to improve the set bonus as well or it is counter productive to upgrade it and receive a "better gear" but get a weaker set bonus compared to the original piece.
In addition it is quite expensive to upgrade as well to a higher tier *.