Jeff King [off-list ref] writes:

is not a collision but rather local corruption. We should
reoprt that instead (just like we do if reading the rest of
the object content fails a few lines later).

s/reoprt/report/ (locally amended while queuing).

We may want to tighten that up. In the long run, I'd love to see
unpack-objects go away in favor of teaching index-pack how to write
loose objects. The two had very similar code once upon a time, but
index-pack has grown a lot of feature and bugfixes over the years.

This sounds like a nice future to aspire to reach.  

Besides having to maintain two separate executables, another
downside of the current arrangement is that we have to make the
decision between streaming to a single pack and exploding into loose
objects too early and base our decision solely on the object count.
If we are moving to a single receiver, it is conceivable to switch
to a scheme based on the size of the incoming pack (e.g. spool the
first N MB and if we run out we write out loose objects, otherwise
create a new pack, and dump the spooled part and stream the rest
into it while indexing).

Thanks.