I've done some reading on the installation but it's not clear to me whether I will be UPGRADED to the SQL Server Developers edition or whether the install will create another instance. I want to get rid of SQL Server Express. Will the install give me that option?
If the install does not provide that option
You definitely can install a separate instance. Don't even try to delete or replace sql server files manually - use standard windows instrumentation instead - uninstall it as regular application. As far as I know - there were no any options to upgrade from express edt. to developer, if you need so - just keep your db in safe place, uninstall express, install developer, attach the db. And be aware of developer license restrictions!