OK, no takers so I'll answer myself.
Not my first rodeo as I about wore out my power and down buttons installing Deck ROM's on my Evo 4G. I took a closer look at the files in the OP and it became clearer since I've done this sort of thing many times. So... for anyone on stock rooted OTA who wants to just update, here's what I did. Note these instructions are for TWRP recovery. Works, s-off and root confirmed after the update:
(1) Download Shooter_2.08.651.2_odexed_rooted-signed.zip and PG86IMG_2.08.651.2_firmware_nohboot.zip from OP.
(2) Put Shooter_2.08.651.2_odexed_rooted-signed.zip on the SD card root.
(3) Power down. Pull battery if you run fastboot.
(4) Hold power and down volume to enter bootloader.
(5) Select "Recovery" and then go to the "Wipe" menu and wipe the Dalvik Cache.
(6) Back to the main Recovery menu and choose the option to install a ZIP.
(6) Select Shooter_2.08.651.2_odexed_rooted-signed.zip from the list of files and then confirm.
(7) BE PATIENT. It's a big file and you could see nothing happen for a few minutes.
(8) Process should eventually complete. You can go back in the recovery menu and reboot. Once successfully rebooted, if you want to update the radios, PRI, etc., continue below.
(9) To update the radios, PRI, etc., rename PG86IMG_2.08.651.2_firmware_nohboot.zip to PG86IMG.zip and put it on the root of the SD card.
(10) Once again, use power and volume down to boot to the bootloader. This time, it should find PG86IMG.zip automatically and will prompt you to update. Say yes and let it go.
(11) When the update is complete, choose the option to reboot.
(12) Remember to remove the PG86IMG.zip file from the root.