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I think this could be made easier by using the git database as a substrate - there's nothing in that that's tied to line-oriented files (maybe the compression algorithms make some assumptions?).

It's the diff-viewing infrastructure that needs to be completely replaced for prose.

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Indeed. git diff --color-words will often do the trick for prose, but the real solution is plugging a sentence-oriented diff viewer into git difftool. git difftool is extendable by setting git config variables, so it's very much doable.

Perhaps "git diff --word-diff" helps? I don't see a similar option for "git show" though and that seems important :(

I think you're right: if the diff-viewing infrastructure was abstracted (plugin?) it could do this and more (eg word-diff-by-paragraph, image-diff).

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