Or rather, slipstream future updates to current downloads. E.g., if you're installing component X that has patches A, B, C, then perhaps you should get customers to download component X that is already in a patched state.

What I always wonder, while twiddling my thumbs during the interminable upgrade-reboot-upgrade cycle, is how many of these these updates will be overwritten by a later update. Am I wasting my time downloading multiple versions of the same file?

These upgrade-shortcuts could introduce a significant increase in testing complexity if you want ensure that you can go from any system version to the current version.

On the other hand, with the current system people upgrade from Windows 1.0 to 8 (e.g. https://www.youtube.com/watch?v=8WP7AkJo3OE).

Unfortunately the update reboot cycle is incredibly reliable, which is why it has persisted. Can't beat "millions of machines have taken these steps".

Thoroughly agree that a more simplified method would be awesome though.

That's the kind of functionality I expect from Windows Deployment Services.