Record updates for existential fields do not work + confusing error

It would appear that updating a field with an existentially quantified type does not work, when using the record update notation. Here is an example:

{-# Language GADTs #-} -- Only uses Existentials
  
data T where
  Str :: Show s => { field :: s } -> T

val1 :: T
val1 = Str { field = True }

{-
val2 :: T
val2 = val1 { field = 'a' }
  • Record update for insufficiently polymorphic field: field :: s
    • In the expression: val1 {field = 'a'}
      In an equation for ‘val2’: val2 = val1 {field = 'a'}
-}

manualUpdate :: Show s => T -> s -> T
manualUpdate (Str _) s = Str s

val3 :: T
val3 = manualUpdate val1 'a'

Is there a reason why this shouldn't work? I would imagine that we'd like the record update to behave just like manualUpdate in the example.

Also, the error seems quite odd: how can a field be "insufficiently polymorphic"? After all, it is ok to update completely monomorphic fields.