Should have been more clear
I renamed the koreader.installed.tar to koreader.updated.tar which downloaded fine but did nothing in the update. Then restarted koreader, then the update proceeds
Unpacking files over a bind mount should not be a problem at all
This is substantiated by the fact that it works fine if I rename the tar file and restart koreader., the update process proceeds.
So all I have left is open files, but I will do some more testing when I have the time
