Does that mean that if I'm going to update a sequence within a trigger or procedure, I should use the legacy gen_id() function instead of the 'alter sequence'?

I haven't checked the code, but if it follows the pattern of other DDL statements (CREATE/ALTER/DROP) ALTER SEQUENCE will not be part of PSQL.  The gen_id function is part of DML and should work in procedures and triggers.  

Good luck,

Ann

P.S.  Mixing user-created and sequence-derived values in identifiers complicates inserts.  You have to be prepared to deal with duplicate key errors, and in the case where a user-defined value is not a duplicate, checking and resetting the sequence.  That check and reset can be done in an after insert trigger so it fires only after a successful insert.