hmm I thought I recalled that uplading a skin of the same name would cause any existing skin and container files to be overwritten so long as they still have the same name. If it's not letting you upload a skin of the same name then you might have to delete the one that's there first and upload the new one.
Actually, now that I think about it, I do recall that the skins page now has a warning about skins in use. I haven't used this method myself for a couple of years now. Perhaps it has changed and doesn't let you overwrite the current skin.
In any case, if you're working locally, simply modify the html and xml files directly in the portal. Then go to the skins page and parse the skin to convert the html and xml to ascx.
I would only work on the HMTL files if you were trying to create a skin package to give or sell to others so that they can edit as html. If this were for myself I would just work on the ascx files directly on the portal. That is the quickest way of making changes and seeing them live. Just remember to remove the html files from teh skin incase you accidentally parse the skin and lose your edits.
So, to answer your last question: The only thing that parsing does is create the ascx files. Edit those files directly on the portal and do not re-parse the skin.
Rob