Hi christopher22, happy new year!
I share ps67's opinion about the 4.12.12111 firmware being the best. There are a couple of specific features that have been added that I personally appreciate very much:
1) The "My Words" feature now sorts words properly, either alphabetically or by recency. I find this feature absolutely invaluable and the fact they got this working (previously the words would just be displayed in random order) has really enhanced my experience with my e-reader.
2) It is now possible to easily highlight over multiple pages by dragging past the end of the page. I make extensive use of annotations when I read, so this has, again, enhanced my user experience.
You're using a version so old that it predates my purchase of a Kobo e-reader, but there have been some features I appreciated added along the way since the first version that came with my device. I'm sure you'll find the same.
As far as offline installation, geek1011 maintains the following website where one can download the latest firmware for your device:
https://pgaskin.net/KoboStuff/kobofirmware.html
His directions are simply: "After you download the firmware for your device, extract the zip file into the .kobo folder on your Kobo eReader."
This means you should be putting a KoboRoot.tgz file, manifest.md5sum file, and upgrade folder into the hidden .kobo directory of your e-reader, for version 4.12.12111. Once you eject the drive, the upgrade process should begin automatically.
Best of luck.