It seems that EFS attaches dired-handler-fn as a handler for
file-local-copy to every local file:
(find-file-name-handler "/tmp/foo" 'file-local-copy)
I believe this is an illegitimate use, because by definition such a handler
is supposed to help make a local copy of a file. It is not supposed to be
used for every imaginable hack.
In EFS it is used to update the Dired buffer, which has nothing to do with
making local copies.
The problem is that this (what I believe illegitimate) use
has the potential to confuse other packages (and it does cause hickups to
Ediff; it probably would confuse trump.el or cause problems porting it to
XEmacs).
--michael