I tried to copy several title update files to part3/cache recently (with xport360 and xplorer 360) and seems none of them started any update process once I put in gamedisc/started the game
they are PAL updates and I have a PAL console too. tried at about 10 titles none get updated on start

best way to test: forza3 title update #2 adds gearshifting animation to game, so easy to check if 1.0 or 1.2 is running
haven't heard anyone had success in updating the "offline" way. maybe MS changed sg this year? (as I heard it used to work some time ago)