I spent several days researching and trying to determine why it was serving what appeared to be a cached instance of this file. Since I was at the end of my rope, I decided why not increment the version of the library and see what happens.

I incremented the package version from 0.0.1-alpha.0 to 0.0.1-alpha.1.

I then re-packaged the library and updated the dependency link in the workspace to reference the new version of the identity.worker tar ball.

Spooled up karma jasmine and executed some tests. to my surprise the karma dev server served the updated file.

The take away from this is in order for karma dev and maybe the angular dev environment to serve an updated file from a node modules location, the package version must be incremented.