DotNetNuke function Upgrade.ExecuteScripts(ByVal strProviderPath As String)
actually doesn't use strProviderPath, but always uses ApplicationMapPath & "\Install\Scripts\" folder.
It reads all files in the folder and deletes them after execution.
It is also triggered only by InstallDNN.
The behavior is different to install\modules folder, where modules are installed also during UpgradeDNN.
The issue reported here(in comments).
I've also asked a question in DNN Forums "Is "install\scripts" folder obsolete? "