Final IK

Seeing as 1.7 will be designed for Unity 5.3, which hasn't released yet, we may have to wait until 5.3 releases and UFE gets tested on it by the devs. I'm sure that by then, you will have a answer on if Final IK can work on it.

I don't own that asset so I can't test it out with it, but if you have it, you can create a new test project, import UFE into it, and use Final IK with it to see if it works. If it works well, you can use it with your main project.

I can't tell from their Asset Store description - is Final IK a realtime solution only, or does it also allow you to bake new animations created from their system (i.e. into a new clip)?

UFE currently uses Unity Animation Clips.  In theory, it should be possible to dynamically change the animation clip with Final IK at runtime.  And I suspect hitboxes may even behave as expected (move to new positions based on Final IK).  However, I have not tested this so I can't confirm.

I would expect odd behaviour from Rect hitboxes (so stick with Circles for now).