I updated my openelec by doing so -
1. Format the SD card with SD Card Formatter (Quick format)
2. Mount the new version .img file:
sudo dd if=~/Downloads/OpenELEC-RPi2.arm-8.0.4.img of=/dev/rdisk4 bs=1m
After that the openelec with new Kodi version loads. I can add a repository, but when I try to install add-on from .zip file it always fails with "invalid structure" error. This happens with whatever repository I try.
Note: Seems like I cannot format the SD card completely - After I format the SD card and load openelec, somehow it "remembers" my WiFi password. If I try to do a complete format (not a quick one) it always fails in the middle of the process.