If I've made changes to my machine.config, will those changes be wiped-out upon an update to the .net framework?
You have to keep in mind that each .NET Framework version is in it's own folder, each with their own machine.config.
If an application requests a higher version of .NET and that folder has a machine.config file, your machine.config from the previous version is ignored.
I don't see this as a bad thing by the way, you have no way of knowing if your current config file will work with all future versions of the framework. As you test your app with the newer version, you can tweak the config file and then release it for the proper .NET version (or not upgrade to the newer .NET FW version at all, your choice).