Learn Polish: Na skutek wypadku drogowego musimy zawiesić tymczasowy objazd. - As a result of the road accident, we must suspend the temporary detour.

Both are compound prepositions used to express a formal cause or relation, but they take different cases and have slightly different nuances. W związku z means 'in connection with' or 'due to' and requires the Instrumental case. Na skutek specifically means 'as a result of' and requires the Genitive case. You could rewrite the beginning of this sentence as w związku z wypadkiem drogowym (Instrumental) for a very similar meaning.

Why is the phrase wypadek drogowy (road accident) in the Genitive case here as wypadku drogowego?

It is governed by the compound preposition na skutek. Whenever you use na skutek to explain the result or consequence of something, the noun phrase that follows must always take the Genitive case.

Does zawiesić only mean 'to suspend' an activity, or can it mean physically hanging something up?

You can use it for both! Just like the English word 'suspend', zawiesić can mean to physically hang something (like a coat or a shelf) as well as figuratively to temporarily stop an action, rule, or process (like a detour or a student's enrollment).

Why does tymczasowy objazd (temporary detour) look exactly like its dictionary form?

It is actually in the Accusative case here because it is the direct object of the verb zawiesić. Because objazd is an inanimate masculine noun, its Accusative form is identical to its Nominative (dictionary) form.