When your statement (not even transaction) is completed, all your indexes are up-to-date. When you commit, all the changes become permanent, and all locks are released. Doing otherwise would not be "intelligence", it would violate the integrity and possibly cause errors.
Edit: by "integrity" I mean this: once committed, the data should be immediately available to anyone. If the indexes are not up-to-date at that moment, someone may get incorrect results.
As you are increasing batch size, your performance originally improves, then it will slow down. You need to run your own benchmarks and find out your optimal batch size. Similarly, you need to benchmark to determine whether it is faster to drop/recreate indexes or not.
Edit: if you insert/update/delete batches of rows in one statement, your indexes are modified once per statement. The following script demonstrates that:
CREATE TABLE dbo.Num(n INT NOT NULL PRIMARY KEY);
GO
INSERT INTO dbo.Num(n)
SELECT 0
UNION ALL
SELECT 1;
GO
-- 0 updates to 1, 1 updates to 0
UPDATE dbo.Num SET n = 1-n;
GO
-- doing it row by row would fail no matter how you do it
UPDATE dbo.Num SET n = 1-n WHERE n=0;
UPDATE dbo.Num SET n = 1-n WHERE n=1;