Filtering data in a publication

I'm looking to replicate a table that has a particular column for deciding if a row should be replicated. If the column is set to 'Y', then replicate. From my searching, Static Row filters are my friend here, but I have a question on them.

All of the rows will be initially inserted with the column set to 'N'. Then, a script is run that identifies which rows are supposed to be replicated and updates those rows to 'Y' (the logic behind which rows is complex and not easy to identify at insertion time). Additionally, a subsequent run of the the script may find the a row is no longer valid for replication and will update the 'Y' back to 'N'.

My question is this: If my action on the source table is an update action, won't that break on the subscriber side when the update transaction tries to run against a row that doesn't exist on the published table (since the row was not valid for replication until the update occurred?) Similarly, if I update the row to 'N', will that update trigger a delete on the published table (since the row would no longer meet the filter criteria)? Or is the SQL server replication agent smart enough to turn that update into a insert/delete respectively?