Thank you Maestr0 and theHorse13 for your help. I was able to setup the automated chroot patching. Setting up RPM in the chroot was all I needed. I did not go as far as setting up up2date in the chroot.

Up2date in the non-chrooted part of the OS has been configured to keepinstallfiles in the rpm repository. Then I run rpm -Uvh --root=/jail /tmp/*.rpm (cron job). /tmp is the rpm repository (again I configured up2date to use /jail/tmp as the repository).