I think instead you should have: - abandoned FunDeps - embraced Overlapping more!
Well, using TypeCast to emulate all FunDeps was demonstrated three years later after HList (or even sooner -- I don't remember when exactly the code was written): http://okmij.org/ftp/Haskell/TypeClass.html#Haskell1 We demonstrate that removing from Haskell the ability to define typeclasses leads to no loss of expressivity. Haskell restricted to a single, pre-defined typeclass with only one method can express all of Haskell98 typeclass programming idioms including constructor classes, as well as multi-parameter type classes and even some functional dependencies. The addition of TypeCast as a pre-defined constraint gives us all functional dependencies, bounded existentials, and even associated data types. Besides clarifying the role of typeclasses as method bundles, we propose a simpler model of overloading resolution than that of Hall et al.
So here's my conjecture: 1. We don't need FunDeps, except to define TypeCast. (And GHC now has equality constraints, which are prettier.) 2. Without FunDeps, overlapping works fine. ...
I agree on point 1 but not on point 2. The example of incoherence described in Sec `7.6.3.4. Overlapping instances' of the GHC User Guide has nothing to do with functional dependencies.