So, what does everyone thing ? Should we release the tree with the
updates rolled in ? or should we release the tree exactly as upstream
did, and also provide the updates to go alongside - but in the updates
repo ?

One thing that I would be very hesitant to update would be the kernel,
since updating that would imply updating the installer kernel as well.
Which is going to cause lots of issues since its known that vendors and
support people will ask for specific kernels at specific times ( eg.
installed with x.y.z and 5.0.0 )

- KB