Support iterable in display.update

[ankith26]

fixes #2986 by adding Iterable support in display.update

Before someone points it out, yes it could potentially slightly lower performance, though I have done no benchmarking. There is scope for optimizing this function with our usual tricks though, i.e fastcall and list/tuple "fast sequence" special path, though I will leave that for future PRs.

Also this PR takes the opportunity to improve the tests for this function.

[oddbookworm]

I think this is a good change. Given the rare use I've seen of this, I don't expect too many people to take advantage though lol. Just got a couple small comments

[damusss]

I tested locally, and the new code supports both sequences and iterables while the old one only sequences. I also did some dirty benchmark, and the performance is the same.

LGTM :)

[ankith26]

Rebased to fix a merge conflict