The update, which is nice and lengthy, includes a revision of the auctioned tree to account for some of the stranger elements (e.g., the three Black men who seem to have had children at age 13 or 14). Red Hen admits the revision is pure speculation, but it does fix things up quite nicely.
The essay also contains an interesting methodology for dealing with some of the seemingly contradictory elements (e.g., Sirius's statement in GoF implying that Bellatrix was part of Snape's gang of Slytherins vs. the family tree's indication that Bellatrix had left Hogwarts before Snape even got there).
There are a few mistakes, however. For example, the essay asserts that Sirius had led us to believe both his parents were alive when he was sentenced to Azkaban. I never got that impression, and I'm not sure what Red Hen is referring to. The essay also states that Andromeda was definitely sorted into Slytherin. I don't think we know that for sure (feel free to correct me if I'm wrong), although I think it's highly likely that she was.
Overall, I think it's a compelling essay, and I like the family tree revision (now, why didn't JKR just write it that way?!) and the suggestions for helping to determine which portions of canon are more equal than other portions.
Of course, it would help if Dan Radcliffe would just show us the tree so we can find out definitively whether "Aberforth" (the person who copied down the information and passed it on to the Lexicon) made any transcription errors. It would also be wonderful if Dan would just hurry up and express his undying love and affection for me.
I guess we can't have everything.