Hardlinks are hardly a source of complexity .. or is that 'difficulty'

Hard links do clearly provide a simple solution for this problem, but as I have hinted, I don't think that value is worth the cost. However I don't really like the approach of depending on cleverness in mkisofs either as it is a solution that would need to be implemented in any tool that has this need.

reflinks (already mentioned) are certainly a possible solution. I'm not entirely sure I'm comfortable with reflinks, though I cannot really explain why, so it might irrational. I would generally prefer any deduplication happened transparently rather than with a new syscall, but whatever...

My faviourite technology for this need is overlayfs (or possibly union mounts, though I like overlayfs more). Clearly it would require non-privileged uses to create mountpoints but I think the pressure is building for that and it is going to become a reality some day soon. Other than that issue, it is a perfect solution!