User feedback strongly suggest that the swupd model doesn't work well for the early R&D stages of building a distribution and the software for it. During this phase it's useful to be able to install packages from a package feed without having to define bundles and build entire images. However the benefits of swupd and its transactional update for a production system are undeniable. We should design a workflow and tools which helps design and build a distro that can use package management during development and switch to a production mode using swupd for a formal release.
Upstream swupd has changed a lot and integration with the Yocto Project would be tricky and need rework to the layer. Closing this as obsolete since any new integration would need rework and have its own issues.