I would move that key to the middle of the bottom row instead, but that's another discussion.  :)

Yes, I concur that the VK_102 key should hold the ß (or whichever symbol happens to be the most used non-'US' glyph in your country). Personally, I use AltGr+; for the diaeresis/umlaut dead key in accordance with Linux(?) practice, but if I were German I'd also put the äöü directly on the AltGr positions of the []\ (not too sure about the last one - I might also use the AltGr mapping of VK_102 for that one) keys. Dead keys can be bothersome for frequently used symbols.

If you do like me and base all punctuation on the US layout instead of those stupid national attempts (okay so the US layout isn't exactly genius either but at least it's more of a standard and it works a LOT better for coding and advanced hotkeys), then you may do what I suggest:

- One layout with coding emphasis has the [{ ]} \| symbols on the normal/shifted state of those keys, and the üÜ äÄ öÖ on the AltGr mappings.
- Another layout with text emphasis is exactly the same except it has [{]}\| on the AltGr states and the characters on the normal/shifted states!

Using this principle, you'll have what amounts to one quite consistent but still sufficiently flexible layout. The dead key solution isn't bad either, but sometimes dead keys cause trouble.

The big question is, as you say yourself, how much you'll be typing German text. I found that I type more English than Norwegian myself these days!

On a side note: The Umlaut is NOT a 'German diæresis', is it? Even though they are typographically equal, the Umlaut does what its German name tells us (changes the sound - of a vocal as it were) and the diæresis in turn does what its Greek name tells us which is something entirely different (splitting what would otherwise be a diphtong into two monophtongs)! Being more-than-averagely interested in languages and linguistics, I'd like to point out that calling it a 'German diæresis' sounds wrong to me... a bit like referring to an airplane as an 'air-car' (which is absurd since cars have wheels; 'air-ship' makes more sense in that respect).

That is an interesting idea!  As witnessed by the many different coding-optimized layout topics on this very forum, general text writing vs. coding put very different requirements on a keyboard layout, even if only for the character frequencies.  And it proved impossible (or at least far too individual) to find the right balance between both.  Switching between two similar "layout modes" for both "typing modes" is an elegant solution, especially if you keep both "complete" as in your example.  And it saves the hands from many acrobatic RSI-causing AltGr combinations!

I think in X11 you could even fairly easily implement this as a single layout with an additional level-switching (rather than level-shifting) meta key.

Right.  But even Unicode does not distinguish between both diacritics, so surely from a keyboard layout perspective they're the same.  Although for languages with umlaut'ed characters (like German) it makes more sense to spend dedicated keys to them, since they are usually considered distinct letters, whereas in languages using diaeresis (like Dutch) where the accented and unaccented characters are still considered the same letter (and collated identically for example), AltGr dead keys are sufficient.

My raggedy old Langenscheidt Taschenwörterbuch for German orders the bare and umlauted version of the vowel together, so the umlaut seems to be treated exactly as though it were an accent.  Have things changed?