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This MOS (Metalink) note discusses restores between different versions:
Frequently Asked Questions about Restoring Or Duplicating Between Different Versions And Platforms [ID 369644.1]
It is very likely that you cannot apply 10g incremental backup to an upgraded (to 11g) database. The upgrade changes data in the SYSTEM tablespace, so I seriously doubt you can apply incremental after that.
Something like a standby databaseWay to go – make a real standby (10G) on the new server. Install the 11g new software and when the time comes - upgrade.
The timing of the upgrade does not depend on the size of the DB, but rather on the number of objects in it. In most cases, the update would take only a few hours, but you should test to find out the timing in your case.
How big is the database ? How much downtime can you afford ?
AFAIK, you cannot restore incremental RMAN backups in the manner you have suggested.
One possible option is to use GoldenGate (licensed separately) to minimize downtime for your upgrade.