No – wordpress.com does not work like that. The upgrade you refer to just allows you to add custom CSS to your free site/blog. You cannot upload themes or plugins and you cannot edit any files on wordpress.com full stop.
Well, crap.
Thanks for the responses, esmi.
Have a look at http://en.support.wordpress.com/com-vs-org/
Thanks for the quick response, esmi. That’s comparing the non-upgraded version of wp.com, though, right?
I was wondering if you pay for the upgrades ($30/year, or whatever) and using solely WP as your server and CMS, if it’d essentially be the same as hosting elsewhere (like on Media Temple or Laughing Squid) and using WP for a CMS. …Does that make sense?
I’m just wondering if I could drop MT as a server host and move to WP upgrade, and still have exactly the same functionality and back-end.