Best alternative solution for ASP.NET AJAX UpdatePanel for dynamically add and remove user controls without full postback
jQuery offers a bunch of handy AJAX calls. I'm not sure how well it would work with user controls but I'm sure you could manage something.
You can use ASP.Net Client Callbacks (here's one walkthrough, there are lots out there) by implementing ICallbackEventHandler on your UserControls. This avoids the full page postback, as it runs a modified version of the page lifecycle, but it has the advantage of keeping the UserControls in your page.
However I would also recommend jQuery if you can accomplish what you need with it.
Use jQuery with ASP.NET Ajax PageMethods:
http://encosia.com/2008/05/29/using-jquery-to-directly-call-aspnet-ajax-page-methods/
Also, depending on exactly what you're trying to do, you may want to look at WebMethods for updating bits and pieces. I don't know about jQuery's support for it, I haven't used that. But you can use PageMethods, if you're doing simple stuff easily enough, without the need for jQuery.