Hey Janalopa,
1. Can I change the Product name of an existing project (with releases) and not expect any bugs out of it?
Yes. Be sure to rebuild wyUpdate and include the latest client.wyc file with your updates.
2. How does the updater chooses the right update file to download?
The latest version is stored in the client.wyc file (see Where is the version number stored?). When it downloads the wyserver.wys file it gets the update from the installed version (as read from the client.wyc file), downloads it, and tries to install it.
I've encountered that the updater always downloads the big "all.to.X.X.X.wyu" file instead of the small update files. how can I make sure it will download the right file?
The "all.to.X" update file is downloaded when a file fails to patch. This can be the result of either you (or your users) modified a file they shouldn't have. Or you included an old client.wyc file with your app (e.g. it doesn't contain the correct version number to match your app version). If it's the latter case then simply rebuild wyUpdate and including the correct client.wyc file everytime you build your installers. See the New release workflow.
Tell me if this helps.