How do I update the Squirrly plugin if it is rebuilt with the Web Dev Kit? Manual or like the usual Squirrly?

You’ll be able to update directly without re-installing the zip.

After you upload the ZIP file, you can receive automatic updates via WordPress backend. So, you’ll be able to update directly without re-installing the zip.

You would only need to re-install using the .zip upload function if you change the name or the logo.

More details regarding the Web Dev Kit are available here.