Q: Is it possible to automatically have my Magento products catalog refreshed from Amazon and if so - with which rules?
A: Yes. But it only affects already imported catalog. If Cron is enabled, synchronization is held periodically.
Q: If I understand you correctly, if the product is preexisting product (ie there's a product and it has the ASIN and the Amazon Local option values filled in), then rather than creating a new product on import, the extension will populate the pre-existing product. Is that correct?
A: The extension would not import the product with the same ASIN, but it would try to sync this product.
This article is related to the Amazon Magento synchronization extension.
This useful Magento plugin allows you to import Amazon products into Magento and keep stocks and prices in touch with actual Amazon products data.