PrefabInstance (modified) Added Force Update Checkbox source: http://framebunker.com/blog/poor-mans-nested-prefabs/

PrefabInstance.cs

using UnityEngine;
#if UNITY_EDITOR
using UnityEditor;
using UnityEditor.Callbacks;
#endif
using System.Collections.Generic;

[ExecuteInEditMode]
public class PrefabInstance : MonoBehaviour
{
	public GameObject prefab;

#if UNITY_EDITOR	
	// Struct of all components. Used for edit-time visualization and gizmo drawing
	public struct Thingy {
		public Mesh mesh;
		public Matrix4x4 matrix;
		public List<Material> materials;
	}

	[System.NonSerializedAttribute] public List<Thingy> things = new List<Thingy> ();

    public bool ForceUpdate;

	void OnValidate () {
		things.Clear();
		if (enabled)
			Rebuild (prefab, Matrix4x4.identity);
	}

	void OnEnable () {
		things.Clear();
		if (enabled)
			Rebuild (prefab, Matrix4x4.identity);
	}

	void Rebuild (GameObject source, Matrix4x4 inMatrix) {
		if (!source)
			return;

		Matrix4x4 baseMat = inMatrix * Matrix4x4.TRS (-source.transform.position, Quaternion.identity, Vector3.one);
		
		foreach (MeshRenderer mr in source.GetComponentsInChildren(typeof (Renderer), true))
		{
			things.Add(new Thingy () {
				mesh = mr.GetComponent<MeshFilter>().sharedMesh,
				matrix = baseMat * mr.transform.localToWorldMatrix,
				materials = new List<Material> (mr.sharedMaterials)
			});
		}

		foreach (PrefabInstance pi in source.GetComponentsInChildren(typeof (PrefabInstance), true))
		{
			if (pi.enabled && pi.gameObject.activeSelf)
				Rebuild (pi.prefab, baseMat * pi.transform.localToWorldMatrix);
		}		
	}

	// Editor-time-only update: Draw the meshes so we can see the objects in the scene view
	void Update () {
		if (EditorApplication.isPlaying)
			return;
		Matrix4x4 mat = transform.localToWorldMatrix;
		foreach (Thingy t in things)
			for (int i = 0; i < t.materials.Count; i++)
				Graphics.DrawMesh (t.mesh, mat * t.matrix, t.materials[i], gameObject.layer, null, i);

        if (ForceUpdate)
        {
            ForceUpdate = false;
            OnValidate();
        }

	}

	// Picking logic: Since we don't have gizmos.drawmesh, draw a bounding cube around each thingy
	void OnDrawGizmos () { DrawGizmos (new Color (0,0,0,0)); }
	void OnDrawGizmosSelected () { DrawGizmos (new Color (0,0,1,.2f)); }
	void DrawGizmos (Color col) {
		if (EditorApplication.isPlaying)
			return;
		Gizmos.color = col;
		Matrix4x4 mat = transform.localToWorldMatrix;
		foreach (Thingy t in things)
		{
			Gizmos.matrix = mat * t.matrix;
			Gizmos.DrawCube(t.mesh.bounds.center, t.mesh.bounds.size);
		}		
	}

	// Baking stuff: Copy in all the referenced objects into the scene on play or build
	[PostProcessScene(-2)]
	public static void OnPostprocessScene() { 
		foreach (PrefabInstance pi in UnityEngine.Object.FindObjectsOfType (typeof (PrefabInstance)))
	    	BakeInstance (pi);
	}

	public static void BakeInstance (PrefabInstance pi) {
		if(!pi.prefab || !pi.enabled)
			return;
		pi.enabled = false;
		GameObject go = PrefabUtility.InstantiatePrefab(pi.prefab) as GameObject;
		Quaternion rot = go.transform.localRotation;
		Vector3 scale = go.transform.localScale;
		go.transform.parent = pi.transform;
		go.transform.localPosition = Vector3.zero;
		go.transform.localScale = scale;
		go.transform.localRotation = rot;
		pi.prefab = null;
		foreach (PrefabInstance childPi in go.GetComponentsInChildren<PrefabInstance>())
			BakeInstance (childPi);
	}

#endif
}