Is it possible to package and ship permission modifications to the
System Administrator profile in a
Managed Package or not?
If not, am I right in assuming permissions should be shipped as a
Permissions Set or custom
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I do not recommend using Custom Profiles in managed package (except if you are distributing the app as OEM app) as it requires a Mapping during installation which is an additional step that admins may miss.
Permission sets are easier to build and manage.
You can find some best practice here: