>A big annoyance is it's interaction with git. If you regenerate the output, git interprets that as a big file change, and the repository gets polluted with nonsense commits. There are workarounds, but none are perfect.

This is probably one of the workarounds you're thinking of, but I clear the output and use a precommit hook to make sure I haven't missed any cells. It's a bit annoying, but it works. I'm waiting for the day VCS integration is built-in. For now, I enjoy having my notes and code together and versioned.