Maybe I'm just dense, but all my attempts to manually edit the UFilter.json wordlist file in the oxide/data directory result in no actual changes to filtering.  For example if I cut down the list to a single word in the json object and reload the plugin, it still filters on all of the original words in the default list.  Can I edit this file directly, or am I forced to manually add/remove words in game or console for things to work properly?

You can only edit a data file for a plugin when it is unload or the server is offline. Also make sure that your change are valid JSON, which you can verify using a site such as http://www.jsonlint.com.