Okay, I've solved it. I assumed it would be some type of programmatic solution but I got it working another way.
The biggest issue was the fact that Background-h568@2x.png was never being used. Both the 3.5" screens and the 4" screens were using Background@2x.png. So altering that image file wasn't working. HOWEVER, for the longest time I didn't bother checking to see if Default-h586@2x was being used. After finally checking, it was, so I ended up editing the LaunchImage to match the background, and not the other way around. I feel silly. However, the fact the the 4" retina display images aren't being used from the asset catalog is really frustrating.
I've made the transitions seamless but I had to sacrifice the logo being centered vertically to fix it. On the 4" displays the logo is higher than I'd like to offset where the background image is being pushed to. Gah. The problem is solved, just not quite as I'd hoped.