Also, completely unrelated to my motivation, someone pointed out that modetc could be used to quickly hotfix packages built with Nix. Say that you need to fix a CVE in openssl, normally that would require to rebuild all dependent packages, which takes a long time. Instead with something like modetc you could build just openssl and rewrite /nix/store/<hash>-openssl-3.6.0/ -> /nix/store/<hash>-openssl-3.6.0-hotfix/.
Another application might be replacing some configuration file with placeholders for secrets, with one file with the secrets substituted in, without having to modify it in place, possibly only for a specific UID. This is something you might find useful on NixOS.
I just treat ~ as a system-owned configuration area, and put my actual files (documents, photos, etc.) in a completely different hierarchy under /.