MariaDB 10.2 cannot start on MySQL 5.7 datadir: Fatal error: mysql.user table is damaged or in unsupported 3.20 format

An attempt to start MariaDB 10.2 (as of 39d2c7b18d, Oct 27) on a simple MySQL 5.7 datadir ends with the error:

2016-10-29 12:45:31 140477392623488 [ERROR] Fatal error: mysql.user table is damaged or in unsupported 3.20 format.

I tried to start the server with --skip-grant-tables and run mysql_upgrade to see if we can work around the problem this way if it comes to it; the server starts, but mysql_upgrade throws all kinds of errors. At this point I'm not sure whether it's because of skip-grant-tables (I doubt that), or it will be the next problem on the way of fixing MySQL 5.7 => MariaDB 10.2 upgrade.