You'll want to locate your profile folder. Once you find it, go into the folder called 'extensions', and then locate the folder for the add-on you are working on. Replace that folder with a file of the same name (minus .xpi if that's part of the name), and inside the file place the full path to your source directory of the add-on.
In Linux and Mac, that'll look like:
/full/path/to/yourExtension/
And on Windows:
C:fullpathoyourExtension
Remember the trailing slash and beware of extra whitespace.
As long as you don't use jar files inside your add-on, you will no longer have to rebuild (this is covered in a bit more depth here).
Additionally, you'll want to set nglayout.debug.disable_xul_cache to true. For edits to xul or js files, you'll just have to open up a new window to see your changes instead of restarting the application. There are other preferences here that you may find useful as well.
Extra tips:
Starting firefox with a certain profile (dev), while other firefox profile is open and with the debugger already on:
"C:Program Files (x86)Mozilla Firefoxfirefox.exe" -no-remote -P dev -jsconsole
Check out the restart addon (saves time).
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