[Julian Semilian] "In other words, if I return to a sequence where the clip was cut in as it was, i.e. interlaced, and then modify it to progressive, will it update then or not?"
The clip will be updated in all sequences.
If, however, you had previously created a sequence from that clip (such that the sequence settings were based on the clip's settings), the sequence's settings will not update to match the revised interpretation.
In your example, if you had dropped the clip into a new sequence and had Premiere change the sequence settings to match the clip, you would have had an interlaced sequence with an interlaced clip in it. Once you change the clip's interpretation to progressive in the project window, you will end up with a progressive clip in an interlaced sequence.
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