$\newcommand\card[1]{\lvert#1\rvert}$I use the functional identity $\card{C_1}\chi(c_1)\chi(c_2) = \chi(1)\sum_{c_1' \in C_1} \chi(c_1' c_2)$, which identifies multiples of irreducible characters $\chi$, and which I'll re-write in the form
$$
\sum_{c_1 \in C_1} \chi(c_1)\chi(c_2)
= \chi(1)\sum_{c_1 \in C_1} \chi(c_1 c_2).
$$
This was my advisor (Paul Sally)'s all-time favourite result, and I am delighted to have a chance to use it.
I replace the cardinality on the RHS by a sum over $C_1 \times \dotsb \times C_k$. I also re-index the LHS by $\overline\lambda$ instead of $\lambda$, so that there's no need for inverses. Finally, I work with the $\chi$-by-$\chi$ version, as suggested by @FedorPetrov in the comments, in the sense that
$$
\chi(1)^{1 - 2g}\sum_{(c_1, \dotsc, c_k) \in C_1 \times \dotsb \times C_k} \chi(c_1\dotsm c_k)
= \chi(1)^{2 - 2g - k}\sum_{(c_1, \dotsc, c_k) \in C_1 \times \dotsb \times C_k} \chi(c_1)\dotsm\chi(c_k),
$$
or rather that
$$
\chi(1)^{k - 1}\sum_{(c_1, \dotsc, c_k) \in C_1 \times \dotsb \times C_k} \chi(c_1\dotsm c_k)
= \sum_{(c_1, \dotsc, c_k) \in C_1 \times \dotsb \times C_k} \chi(c_1)\dotsm\chi(c_k).
$$
We prove this modified result by induction. It's obvious for $k = 1$. (Most inductions that I know that start at $k = 1$ have an interesting degenerate case at $k = 0$, but I don't know what the proper degenerate case is here! Plugging in $k = 0$ naïvely doesn't work.) In general, we have
\begin{align*}
& \sum_{c_1 \in C_1}
\chi(c_1)\Bigl(
\sum_{(c_2, \dotsc, c_{k + 1}) \in C_2 \times \dotsb \times C_{k + 1}} \chi(c_2\dotsm c_{k + 1})
\Bigr)
\\
={} & \sum_{c_1 \in C_1}
\chi(c_1)\Bigl(
\chi(1)^{k - 1}\sum_{(c_2, \dotsc, c_{k + 1}) \in C_2 \times \dotsb \times C_{k + 1}} \chi(c_2\dotsm c_{k + 1})\Bigr) \\
={} & \chi(1)^k\sum_{(c_1, \dotsc, c_{k + 1}) \in C_1 \times \dotsb C_{k + 1}} \chi(c_1 c_2\dotsm c_{k + 1}),
\end{align*}
as desired.