Installed extensions by filepath (and enforced through the policies below) aren't being updated when the local XPI file changes:

{
"policies": {
"Extensions": {
"Installed": ["C:\Filepath\Extension.xpi"]
"Locked": ["addon_id@mozilla.org"]
}
}

Changing the local file name and adding a new value under the policy will create 2 extensions in Firefox.
It looks like the old extension is being cached by Firefox, and AFAIK there's no way to clear the cache.