No. You dont have to update TL level by TL Level.
I would look at the alt_disk_install method. There should be a writeup here somewhere.
Basically
1. Backup AIX 5.2
2. Install the alt_disk_install fileset from AIX 5.3 media on your AIX 5.2 media
3. Free or add a new disk to system for the installation/migration
4. Perform the migration to the alt_disk
5. reboot system on new rootvg (AIX 5.3). AIX 5.2 disk will show as volume group old_rootvg
6. Use smitty update_all to update AIX to latest level
7. Update applications as needed (if seperate volume groups (i.e. not in rootvg - backup first)
8. Test, and test more
9. At anytime, if the process is showing complete failure, reboot on old_rootvg so you are active again, and repeat process with needed process or application corrections.
The whole process is more than two steps - but AIX steps are three:
a) alt_disk_install installation on AIX 5.2
b) perform alt_disk_install (migration) to new disk
c) after reboot to new disk, smitty update_all to latest version.
p.s. Dont forget! If you have POWER7 in house, you could also install AIX v7 and versioned WPAR and run the AIX 5.2 system in a versioned WPAR.
p.p.s. If you have a nim server with latest - and patched - lpp_source and spot, you should be able to do the migration in one step (i.e. skip update_all).