Starting in Spring '16 Salesforce allows converted Leads to be updated as long as users have the appropriate permissions enabled on their profile.
Starting in Spring '17, Salesforce changed the necessary permissions to update converted leads.
Can I use DemandTools to update converted Leads now also?
Yes, users with the appropriate Salesforce permissions can update converted Leads using the MassEffect module.
Note: PowerGrid and MassImpact CANNOT be used to update converted Leads as there is a built in filter to only download unconverted Leads. We have chosen NOT to remove this restriction in these modules to avoid users accidentally updating converted Leads along with unconverted Leads.