I thought I would share a requirement for Linux users.
As is usually the case, users have to be added to dialout group as mentioned here
Without this change avrdude is unable to access the serial port to upload the firmware.
Apart from that I noticed that the X-Plane/Resources/plugins/SimVim folder contains avrdude binaries. After several attempts to upload the firmware I realized the avrdude binary didn't have execution permission.
I executed the following in the command line to fix it:
chmod +x X-Plane/Resources/plugins/SimVim/avr/avrdude
Only then I was able to upload the firmware and it was immediately seen by the "Status" screen.
It might be better to distribute the plugin in a tar file rather than zip, to guarantee file permissions to be maintained.