It shouldn't allow you to update unless you have more than 3% of the drive's disk space available. Ran into this recently. It's weird that it stops at 3% because I still had like 54 GB of free space which should be plenty for an update. So bazzite must be installed on some really small drive for 3% to not be enough.
Should just be able to select the old image from grub during boot. It should show up and show two different bazzi installs. You just click the down arrow, then enter to go into the old image. Then you can update again.