diff --git a/tests/booted/002-test-image-pushpull-upgrade.nu b/tests/booted/002-test-image-pushpull-upgrade.nu
index 3d9e3bbf..f73ccc66 100644
--- a/tests/booted/002-test-image-pushpull-upgrade.nu
+++ b/tests/booted/002-test-image-pushpull-upgrade.nu
@@ -2,14 +2,27 @@
 # bootc image push
 # podman build <from that image>
 # bootc switch <to the local image>
+# <verify booted state>
+# Then another build, and reboot into verifying that
 use std assert
 use tap.nu
 
+const kargsv0 = ["testarg=foo", "othertestkarg", "thirdkarg=bar"]
+const kargsv1 = ["testarg=foo", "thirdkarg=baz"]
+let removed = ($kargsv0 | filter { not ($in in $kargsv1) })
+
 # This code runs on *each* boot.
 # Here we just capture information.
 bootc status
 let st = bootc status --json | from json
-let booted = $st.status.booted.image.image
+let booted = $st.status.booted.image
+
+# Parse the kernel commandline into a list.
+# This is not a proper parser, but good enough
+# for what we need here.
+def parse_cmdline []  {
+    open /proc/cmdline | str trim | split row " "
+}
 
 # Run on the first boot
 def initial_build [] {
@@ -22,8 +35,11 @@ def initial_build [] {
     bootc image push
     let img = podman image inspect localhost/bootc | from json
 
-    # A simple derived container
+    mkdir usr/lib/bootc/kargs.d
+    { kargs: $kargsv0 } | to toml | save usr/lib/bootc/kargs.d/05-testkargs.toml
+    # A simple derived container that adds a file, but also injects some kargs
     "FROM localhost/bootc
+COPY usr/ /usr/
 RUN echo test content > /usr/share/blah.txt
 " | save Dockerfile
     # Build it
@@ -39,10 +55,66 @@ RUN echo test content > /usr/share/blah.txt
 
 # The second boot; verify we're in the derived image
 def second_boot [] {
-    assert equal $booted.transport containers-storage
-    assert equal $booted.image localhost/bootc-derived
+    print "verifying second boot"
+    # booted from the local container storage and image
+    assert equal $booted.image.transport containers-storage
+    assert equal $booted.image.image localhost/bootc-derived
+    # We wrote this file
     let t = open /usr/share/blah.txt | str trim
     assert equal $t "test content"
+
+    # Verify we have updated kargs
+    let cmdline = parse_cmdline
+    print $"cmdline=($cmdline)"
+    for x in $kargsv0 {
+        print $"verifying karg: ($x)"
+        assert ($x in $cmdline)
+    }
+
+    # Now do another build where we drop one of the kargs
+    let td = mktemp -d
+    cd $td
+
+    mkdir usr/lib/bootc/kargs.d
+    { kargs: $kargsv1 } | to toml | save usr/lib/bootc/kargs.d/05-testkargs.toml
+    "FROM localhost/bootc
+COPY usr/ /usr/
+RUN echo test content2 > /usr/share/blah.txt
+" | save Dockerfile
+    # Build it
+    podman build -t localhost/bootc-derived .
+    let booted_digest = $booted.imageDigest
+    print booted_digest = $booted_digest
+    # We should already be fetching updates from container storage
+    bootc upgrade
+    # Verify we staged an update
+    let st = bootc status --json | from json
+    let staged_digest = $st.status.staged.image.imageDigest
+    assert ($booted_digest != $staged_digest)
+    # And reboot into the upgrade
+    tmt-reboot
+}
+
+# Check we have the updated kargs
+def third_boot [] {
+    print "verifying third boot"
+    assert equal $booted.image.transport containers-storage
+    assert equal $booted.image.image localhost/bootc-derived
+    let t = open /usr/share/blah.txt | str trim
+    assert equal $t "test content2"
+
+    # Verify we have updated kargs
+    let cmdline = parse_cmdline
+    print $"cmdline=($cmdline)"
+    for x in $kargsv1 {
+        print $"Verifying karg ($x)"
+        assert ($x in $cmdline)
+    }
+    # And the kargs that should be removed are gone
+    for x in $removed {
+        assert not ($removed in $cmdline)
+    }
+
     tap ok
 }
 
@@ -51,6 +123,7 @@ def main [] {
     match $env.TMT_REBOOT_COUNT? {
         null | "0" => initial_build,
         "1" => second_boot,
-        $o => { error make {msg: $"Invalid TMT_REBOOT_COUNT ($o)" } },
+        "2" => third_boot,
+        $o => { error make { msg: $"Invalid TMT_REBOOT_COUNT ($o)" } },
     }
 }