Somewhat recently I caused a failed kernel update by accident:
Ran system update in tmux session (local session on desktop). But problem was that tmux itself got also updated, which crashed the tmux session and as a result crashed the kernel update. Only realized it upon the following reboot (which no longer worked).
Your described solution re “live ISO, chroot, run system update once more, reboot” was also what got me out of that situation. So certainly something worth learning for “general troubleshooting” purposes re system updates.
Just checked it on three different accounts (germany) and each one had those two options turned on.