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Almost. The kernel will stay the same.

Any reliable, device-agnostic way to upgrade the kernel only, without fiddling with dd?

Being completely up to date always feels better :)

On some devices it's located on a separate partition. I wouldn't do it though as it might cause issues with the kernel modules.

No mate you need to flash a new build to get a new kernel.

Mostly. The limitation is largely based on device storage: my small modem (64 MB RAM, 8 MB Flash) has only a ~5 MB /overlay partition, which is rapidly filled (as I've discovered).

On a device with more nonvolatile storage, you can run more opkg updates and installs.

Alternatively, build and install your own images, if that's your thing. I've tried this, unsuccessfully to date.