Is there any way to change this behavior so that the changes are only applied once when the user updates from 1.3 to 1.4?
Not yet. That's coming with the incremental updates in wyBuild 2.7. Right now all updates are direct patches. Meaning you need to include the registry state you want when the user upgrades to your latest version.
I'm curious if it would be possible to install .Net Framework 4.5 using wyUpdate for users on Windows 7 machines so that I can build newer versions of my application for .Net 4.5?
Yes. Include the .NET 4.5 bootstrapper in your update and execute it before or after your update.