Rewrite remaining directory iteration during hierarchy merging (#4467)

Switch the remaining call of iterating through
directory entries to explicitly use the iterator
instead of a helper function that takes a
callback

Mostly just just to switch everything over to
the new iterator and to reduce indentation of
things overall

---

#### Does this PR need a docs update or release note?

- [ ] ✅ Yes, it's included
- [ ] 🕐 Yes, but in a later PR
- [x] ⛔ No

#### Type of change

- [ ] 🌻 Feature
- [ ] 🐛 Bugfix
- [ ] 🗺️ Documentation
- [x] 🤖 Supportability/Tests
- [ ] 💻 CI/Deployment
- [x] 🧹 Tech Debt/Cleanup

#### Issue(s)

* closes #4457

#### Test Plan

- [ ] 💪 Manual
- [x] ⚡ Unit test
- [x] 💚 E2E

src/internal/kopia/upload.go

@@ -1122,18 +1122,24 @@ func traverseBaseDir(
 	var hasItems bool
 
 	if changed {
-		err = fs.IterateEntries(
+		iter, err := dir.Iterate(ctx)
-			ctx,
+		if err != nil {
-			dir,
+			return clues.WrapWC(ctx, err, "getting directory iterator")
-			func(innerCtx context.Context, entry fs.Entry) error {
+		}
+
+		var entry fs.Entry
+
+		// Need to keep err for the check after the loop as well so we also need to
+		// declare entry.
+		for entry, err = iter.Next(ctx); entry != nil && err == nil; entry, err = iter.Next(ctx) {
 			dEntry, ok := entry.(fs.Directory)
 			if !ok {
 				hasItems = true
-					return nil
+				continue
 			}
 
-				return traverseBaseDir(
+			err = traverseBaseDir(
-					innerCtx,
+				ctx,
 				depth+1,
 				updatedPaths,
 				oldDirPath,
@@ -1141,7 +1147,16 @@ func traverseBaseDir(
 				dEntry,
 				roots,
 				stats)
-			})
+			if err != nil {
+				// Break here instead of just returning so we can close the iterator.
+				// The error will be returned below.
+				err = clues.Stack(err)
+				break
+			}
+		}
+
+		iter.Close()
+
 		if err != nil {
 			return clues.WrapWC(ctx, err, "traversing base directory")
 		}