As stated by another user in this thread: https://communities.bentley.com/products/microstation/f/microstation-forum/172878/update-display-rule-from-library/498364
It makes absolutely no sense that the Display Rule library doesn't behave in the same way as other dgnlibs, when it comes to updating them in the design file.
Suggested workaround has drawbacks (resetting to "none" in the referring display styles).
Yes please! It makes no sense that keyin "displaystyle updateallfromlib" doesn't do the job and update both the Display Style and the associatede Display Rules. At least we need a new keyin to update Display Rules from lib.