[G3 Q&A, Help & Troubleshooting] Zippy Dufus:
Investigating ...

I know more now.

Below is the update-script which calls functions in the update-binary. I highlighted the code in question. This is obviously not a simple filesystem in the system.new.dat. I've hacked at it with ext4.fsck and resize2fs with no luck.

assert(getprop("ro.product.device") == "mako" || getprop("ro.build.product") == "mako" || abort("This package is for device: mako; this device is " + getprop("ro.product.device") + "."););
ifelse(is_mounted("/system"), unmount("/system"));
mount("ext4", "EMMC", "/dev/block/platform/msm_sdcc.1/by-name/system", "/system", "");
package_extract_file("system/bin/backuptool.sh", "/tmp/backuptool.sh");
package_extract_file("system/bin/backuptool.functions", "/tmp/backuptool.functions");
set_metadata("/tmp/backuptool.sh", "uid", 0, "gid", 0, "mode", 0755);
set_metadata("/tmp/backuptool.functions", "uid", 0, "gid", 0, "mode", 0644);
run_program("/tmp/backuptool.sh", "backup");
unmount("/system");
if is_mounted("/data") then
package_extract_file("system/bin/otasigcheck.sh", "/tmp/otasigcheck.sh");
package_extract_file("META-INF/org/cyanogenmod/releasekey", "/tmp/releasekey");
set_metadata("/tmp/otasigcheck.sh", "uid", 0, "gid", 0, "mode", 0755);
run_program("/tmp/otasigcheck.sh") != "31744" || abort("Can't install this package on top of incompatible data. Please try another package or run a factory reset");
else
mount("ext4", "EMMC", "/dev/block/platform/msm_sdcc.1/by-name/userdata", "/data", "");
package_extract_file("system/bin/otasigcheck.sh", "/tmp/otasigcheck.sh");
package_extract_file("META-INF/org/cyanogenmod/releasekey", "/tmp/releasekey");
set_metadata("/tmp/otasigcheck.sh", "uid", 0, "gid", 0, "mode", 0755);
run_program("/tmp/otasigcheck.sh") != "31744" || abort("Can't install this package on top of incompatible data. Please try another package or run a factory reset");
unmount("/data");
endif;
show_progress(0.750000, 0);
[COLOR="red"]block_image_update("/dev/block/platform/msm_sdcc.1/by-name/system", package_extract_file("system.transfer.list"), "system.new.dat", "system.patch.dat");[/COLOR]
mount("ext4", "EMMC", "/dev/block/platform/msm_sdcc.1/by-name/system", "/system", "");
delete("/system/bin/otasigcheck.sh");
unmount("/system");
show_progress(0.020000, 10);
mount("ext4", "EMMC", "/dev/block/platform/msm_sdcc.1/by-name/system", "/system", "");
package_extract_file("system/bin/backuptool.sh", "/tmp/backuptool.sh");
package_extract_file("system/bin/backuptool.functions", "/tmp/backuptool.functions");
set_metadata("/tmp/backuptool.sh", "uid", 0, "gid", 0, "mode", 0755);
set_metadata("/tmp/backuptool.functions", "uid", 0, "gid", 0, "mode", 0644);
run_program("/tmp/backuptool.sh", "restore");
delete("/system/bin/backuptool.sh");
delete("/system/bin/backuptool.functions");
unmount("/system");
show_progress(0.050000, 5);
package_extract_file("boot.img", "/dev/block/platform/msm_sdcc.1/by-name/boot");
show_progress(0.200000, 10);

Next, one can look in the source code and try to figure out what it is doing.

Or maybe the next step is to see if there is a host build (i.e. Ubuntu, Fedora, etc) of the binary-update which can be run from the command line into a file which can be mounted.

I'm sure that there is an easy way but finding it is difficult!