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Insert/Update Date screen does not allow you to edit custom queries, but only the full query result set for a particular table. For example, if I wanted to edit filtered down subset of a table, as opposed to the entire shebang.
This is possible in SQLyog 3.0. To do this just execute the query by pressing F8 instead of F5 or Shift+F5. You can find this option in the Execute Query(s) dropdown in the toolbar.