You know, I think you missed the entire point of that battle.
Upper-3 spent almost the entire fight trying to convince Kyoujurou that he can become more powerful by becoming a demon like him and honing his fighting skills "forever." He deliberately avoiding mortally wounding him to get him more time to convince him. He finally relented and delivered increasingly serious strikes as the sun was starting to rise in a last-ditch effort to convince Kyoujurou of his mortal weaknesses and embrace the offer. Repeating over and over and over how much stronger he would be after becoming a demon.
He leaves Kyoujurou, not actually killing him just mortally wounding him, as the sun comes up because he's wrong. Becoming a demon means taking on a horrible weakness of the sun. Making Upper-3 a coward because the Demon Slayers always fight demons when the demons don't have their weaknesses, when they're at their strongest. Yet when the daylight rises, they flee away because they're truly weak.
Upper-3's entire argument to Kyoujurou about the strength it brings is a lie, to himself. He flees like a coward every sunrise. He wouldn't dare try to fight in the shadows, surrounded by the sun. Going into that significant threat is something that Tanjiro and all the other Demon Slayer Corp have been doing from the very start. Even Nezuko has done it in reverse in their very first fight.
It hits even harder when we realize that Kyoujurou's father viewed him as a failure (partly because of the Sun Breathing being a limit that Flame Breathing had yet to replicate and partly because he apparently thought his kind-hearted son was weak), even when his brother and all the other Hashira thought he was one of their best. Obviously his mother was the correct one to follow...
Upper-3 lost to a "failure" of a Hashira.