These are some good UX questions, none of which have a really clear answer.
I think most of your 'when should the fields update' type of questions, have already been solved in Google Translate web UI. There, you can only update the left-sided input field. So there becomes this simple flow of: 1) decide which language you're translated from. 2) edit that value. 3) the UI picks up that a keystroke has not occurred in the last X seconds 4). The right-hand side field updates.