Flatten the array first, insert and re-aggregate.

UPDATE MyTable
SET MyDict = (
  SELECT ARRAY_AGG(
    IFF(
      f.value:key2 = '123',
      OBJECT_INSERT(f.value, 'key2', 888, TRUE),
      f.value
    )
  )
  FROM TABLE(FLATTEN(INPUT => MyTable.MyDict)) t
)