I have an application that runs on an embedded Linux device and every now and then changes are made to the software and occasionally also to the root file system or even the ins
I absolutely agree that an update must be atomic - I have started recently a Open Source project with the goal to provide a safe and flexible way for software management, with both local and remote update. I know my answer comes very late, but it could maybe help you on next projects.
You can find sources for "swupdate" (the name of the project) at github.com/sbabic/swupdate.
Stefano