Is the upgrade returned before my opponent flips battle cards?
Yes. Notably, if the upgrade gave your opponent’s character tough, the character won’t have tough when it’s time to flip battle cards.
If I were to have any Battle Master
in upgrade form attached to a character ,and my opponent plays Raider Ion Storm's ability of "when this attacks return the defender's upgrade to its owner's hand," what happens to the Battle Masters? If they leave the battlefield, do they go to the KO area?
Yes. They go to the KO area.