To get to the point of this all: A USB hard drive does not see any file opens, file writes or anything similar. It only sees sector/block reads/writes.
OK, nobody is agreeing with me and I guess no one got my point so I am going to stop bothering soon. I was suggesting the the empeg emulate a USB drive, not that the computer would be talking directly to the drive within the empeg. Since the empeg would be emulating a hardware device it could keep track of reads and writes and deal with making links instead of copies. I.e. if the OS reads x number of bytes from a certain location and then writes the same number of bytes to a new location and both files have the same name assume that they are the same file.
Actually for me at least this problem would be irrelivant as I only have one reference to each song on my empeg and I never really got the point to having multiple references (I prefer to create playlists dynamically using the search functionality).
-Mike