Essentially this.
Assets (packages) are loaded from disk (=PAK) into memory, and stay in memory until unloaded. Adding a PAK with higher priority will only override assets that need to be loaded from disk AFTER mounting the new pak. On startup, all available paks are mounted at once, before loading assets, so when assets are loaded they are automagically retrieved from the higher priority pak.
For what you want to do, it seems you’d have to manually patch everything on the fly, which I’m not sure is even possible for static level actors/geometry. Better course of action might be to write a solid savegame system, reload the level, and restore state.
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