Yes, those A / B slots only contain the boot partition. When performing a system upgrade the new boot.img (so your kernel and related stuff) get written to the unused slot and at reboot your system changes to that slot. Other A / B slots (like modem, recovery…) might be updated as well, depending on the update.
I don’t know of a method to completely dump your whole system at the moment, certainly not into a reflashable custom rom kind of image. Maybe it’s possible with TWRP, haven’t looked into it. The only available TWRP for the FP4 doesn’t have access to encrypted /data anyway, so no reason to try 
I can’t tell you if root still works on A94, my provider apparently doesn’t want me to update just yet. But I see no reason why it wouldn’t and early reports seem to indicate it does.
If you aren’t comfortable on the command line and with some hands on troubleshooting I wouldn’t suggest rooting at the moment, since there are still no easily flashable rom images available to recover from some worst case scenarios.