I don't see any reason you can't do this.
Normally, going from +1 to +3 would cost 16,000 gp. Using DMIC, you still apply the 16,000 GP as the cost (set to 85%), probably drop the beginning challenge (you don't need to create a new vessel since you're upgrading an existing one) but keep the end challenge and apply 3 or 4 challenges along the way (1 per 5,000 gp, up to you or your GM to decide if that remainder 1,000 is worth a 4th challenge or not).
You could do this with the sword regardless of how it was first made.
You definitely can do it, and it might stack up more perks, quirks, and flaws (the risk, if you aren't prepared, is you could wind up cursing the whole item and losing everything). I'm pretty much in full agreement with DM Blake on how you'd do it except I'd keep the beginning challenge, since DMIC assumes that some of the total cost is raw materials, so you're adding raw materials and modding the physical vessel to accept the increased magical energy, so you still need to "prepare the vessel." In fact, that's why that challenge is named prepare instead of create.
well it one of the tasks for PREPARE THE VESSEL is Forge a New Vessel, maybe if your adding to it, the gm just renames it to Re-forge the Vessel or something that fits the item.
so if it not hitting the about 5k for a new challenge then or there about and the gm does not feel like adding in a challenge, do you just do the base challenges then?
Yeah, forge includes reforge, exactly!
In fact, that's why that challenge is named prepare instead of create.
Sure, but the two tasks are "Forge a New Vessel" and "Mystical Preparations". While that second task seems appropriate, the first does not. If it's just one creator, he clearly picks the second task since he's doing only one thing, but if it's two creators and we want a Critical Success, then we need to fix the first task.
Maybe instead of forgoing the challenge entirely, the GM keeps the task but replaces "Forge a New Vessel" with "Modify the Existing Vessel" while keeping the Craft skill and DC the same.
A bit of a house rule, but that's probably what I would do.
does the Creator with the magic item crafting feat has to be part of doing the task or can he just be like a boss telling the party what to do without doing any the tasks himself.
Nope.
It says one creator must have the feat. It also says the entire party can help and they will all be creators. Any creator can undertake the tasks.
So, parsing the rules, you could have a wizard (for example) with the item creation feat, but the rogue and ranger with their tons of skills are the guys who actually do all the tasks. As a roleplayer, I assume the wizard is directing them (otherwise you wouldn't even need him and his feat), but the other guys could literally do everything in the process.