Of course you could, you make a new version of your smart contract or blockchain and people use that instead.

This defeats the core idea of having something immutable, that no one can mess with. If you can agree to roll out a new version, why not do it with regular software?

No it does not. Immutable for use doesn't mean it cannot change for example if the title of your house is on the blockchain when you sell it a new immutable transaction referencing your original immutable transaction would be created. Same as rolling out a new version of log4j

Adding a new transaction in a new block (e.g. for a house sale transaction) is different from undoing software issues (log4j, the "DAO hack" on Ethereum). The former is problematic due to the oracle problem, the latter invalidates the concept of the blockchain entirely; it means I could lose the house because a mining/staking majority, or a vocal group on the Ethereum subreddit agreed to "fix" something on the existing blockchain. That such a sacrilegious thing was allowed to happen is evidence that no one cares except to get rich through the coins they got early (or launched themselves).

(Of course there are many more ways I could lose a house that's ledgered on a blockchain, one thing I missed earlier: The impossibility for an individual to operationally secure the secrets for the crypto scheme against theft or loss.)

So you're saying we need software lawyers to figure out if rolling a new transaction is safe or not?

Weirdly, that seems worse than having just lawyers.

If you have the keys no lawyers needed.

Why would you not need to update it when bugs are found? If you don't then your blockchain and everything on it could be rendered worthless, depending on the bug. A blockchain is just regular software and this software changes over time.