Complicated logic can be in pure functions and not be intertwined with IO if it needs to be tested.
Mocking IO seems like it won’t really capture the problems you might encounter in reality anyway.
You could read the whole .git in at once, and then you'd have an in-memory file-system, if you wanted to.
In any case, I agree with you: it's not about mocking.
If you parameterize everything by IO then you have to mock the IO
You basically want to test your code does something sensical with either every possible combination of errors, or with some random subset of combinations of errors. This can be automated and can verify the behaviour of your program in the edge cases. It's actually not usually that helpful to only test "we read corrupt garbage from the file" which is the thing you're describing here.