Could it have anything to do with https being active on the live system (3.2) but not on the working-copy (3.5)?
I just upgraded from 3.1 to 3.5 in the same manner on a different server (also hosting, different hoster) where all subdomains are included in the certificate. Thus the working copy is on https, too. During the upgrade I had the same problems, no CSS. After logging in, everything looks fine. That Moodle runs "More" theme anyway, but I did not need to turn "slasharguments" off. I tried "Boost" vanilla and that also looks fine.
I found it interesting that during the upgrade there was no css as well. I did not observe that on my testenvironment (VS) where I upgraded a 3.3 to 3.5beta last week.