Is it safe to close the lid while an app (Xcode) is updating - during "installing" phase?
Yes, it is perfectly safe to close the lid during updating of Xcode. The update process will of course pause, but resumes automatically when you open the lid again later.

I don't think a method exists to make the update timing of Xcode more predictable or interactive. The progress indication they share is all we get, and it may sometimes be off by a lot.

Delete-and-clean-install seems to work quicker for me in some cases at least. However, I haven't experienced any negatives coming from updating Xcode in place (except the wait while updating).