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@Minotaur: I can't help you regarding Collections Manager since I've never used it. One thing I can mention is that you can't have nested collections using Collection Mager on newer firmware. So take that into consideration before updating (if it's even relevant point, I can't remember if fw 5.4.5 already has "Cloud collections" feature).
Also, if your Kindle is really running fw 5.4.5 then you Kindle is not Paperwhite 3 (aka Paperhite 300dpi/ All New Paperwhite/Paperwhite 2015/ 7th gen Paperwhite) but it is Paperwhite 2 (6th gen) because oldest firware for PW3 was 5.6.1.1 and PW1 went from 5.4.4.2 strait to 5.6.1.1.
If you're planning to update you jailbroken Kindle to newer firmware you should first make sure to update the bridging code that makes jailbreak survive firmware updates. Then you can just update to newest firmware (just do the extra reboot after firmware update to let it reinstall MKK so KUAL can work).
As for "should you update": can't really help you there either since my PW3 is still on fw 5.6.5 (I dislike the new UI introduced with firmware 5.7.x so will not update my Kindle). But if you want/need support for new KFX format (for "Enhanced Typesetting") you should update your PW2 at least to fw 5.6.5.
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