Yes you can update utc files that way.
As for the dialog, it might be wiser to just inject your edited file into the .mod directly as if a mod alters it first, something would definitely go wrong, or install it to the Override folder.
Regarding append.tlk, I don't know if the readme covered it, I remember checking out a mod that already used it in order to understand the syntax.
This is how I use it in my own project.
The replace.tlk file is a feature in HoloPatcher for replacing existing strings, a feature TSLPatcher does not have.
In order to just use the append.tlk feature from TSLPatcher I believe you would want the following.
Where the amount of StrRef entries match the amount of entries in your append.tlk file, you can then reference that StrRef value later in the changes.ini as I do with the following planetary.2da entry.
I hope that helps.