If the Revenge has 10 wounds left, and the party wants to upgrade the ship from, say, a loop (maximum 25 wounds) to a galley (max. 50 wounds), should the ship repair automatically 25 wounds, or should it has 10 wounds yet?

Whenever a hero or the Avatar increases their maximum wounds, they also gain the appropriate amount of wounds, as per the FAQ.

Thus, I would assume the same would be valid for the Revenge.