There is an old paper nicely describing the problems and another with possible solutions (it also contains an analysis what other IDEs do).
- Allow editors to open files outside workspace
- Support logical model integration
- Problems with opening external files
- Allow a search to be done on external directories, outside of the workspace
- Rsource exclusion filters
The discussion about tne new eclipse virtual file system (EFS) in here: Provide more flexible workspaces. In 3.2 resources will probably be based on EFS.
Note: There might be problems with code that assumes IResource.getLocation().toFile() does not return null, if the resource is not a file!