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Is it possible to set USB endpoint interval (1-255ms) from the program to dynamically change the update rate. I understand that host is using this parameter and renegotiation of the connection might be needed.
It is not possible to change the interval dynamically as this is part of the endpoint descriptor. You can have different interavl set for the same endpoint and have it in different alternate settings. I'm not sure if this solution is feasible for you.
If you are okay with re-enumerating the device with new descriptor, then it is possible. You can have multiple sets of device descriptor in USBFS component configuration Window. Now based on some condition you can select the device descriptor using the API USBFS_Start(); The first argument in this API stands for which device descriptor needs to be used.Based on your requirement you can call this API with first argument 0,1,2... etc.