I wondered the same thing. The only one that makes sense (to me) is separate hard drives. From the perspective of the wow executable or the operating system, a symlink is the same as a separate directory. It's only advantage is saving disk space. I've tried separate directories and symlinks. I ended up just running the same executable multiple times. What I've noticed while loading is one instance (seems random) will load faster and all the others will load at the same rate but slower than the first. This may be due to hard drive cache or the operating system recognizing the same data being requested by multiple programs. When I had separate directories for each instance, the hard drive was jumping all over the place trying to read essentially the same files in several different places.

In the end, until someone can post measured performance figures for each case, just do what you feel works best for you. It's all just hearsay at this point. I like just one install for the ease of keeping things updated.