I've tested this and it's working for me.
You can test the entire update process with:
sudo mkdir /umbrel sudo chown umbrel:umbrel /umbrel git clone --branch swap https://github.com/lukechilds/umbrel.git /umbrel sudo ~/umbrel/scripts/update/update --path /umbrel
After the next reboot you should have a 4GB swap file at
/swap/swapfile which is bind mounted to external storage and the
dphys-swapfile dep should be removed.
Do you think we should create the new swapfile on the fly after OTA update so users don't need to reboot to get access to swap?