I got it slightly wrong. One can have hardlinks to a directory without cycles provided that one does not have hardlinks from the children of that directory to any file not a child of that directory. (Mountpoints currently implement that restriction.)
Question: can one implement that lesser restriction above with elegant code? Is the greater restriction below easier to code? (If no to the first and yes to the second is correct, then I can accept the greater restriction described below.) One can have hardlinks to directories without cycles provided that one does not allow any child of the directory to have a hardlink. Hans