Instead of adding 16 bytes to the size of each sector for sector IV's how about having a separate file (which could be stored on a compact flash card, CDRW or other portable media) that contains the IV's for each disk sector? You could effectively wipe the encrypted disk merely by wiping the IV file, which would be much faster than securely erasing the entire disk. If the IV file was not available, decryption would be impossible even if the main encryption key was rubberhosed it otherwise leaked. This could be a very desirable feature for the tinfoil-hat-LINUX crowd--as long as you have posession if the compact flash card with the IV file, an attacker with your laptop isn't going to get far cracking your encryption, especially if you have the driver constructed to use a dummy IV file on the laptop somewhere after X number of failed passphrase entries to provide plausible deniability for the existence of the compact flash card.
To keep the IV file size reasonable, you might want to encrypt logical blocks (1K-8K, depending on disk size, OS, and file system used, vs 512 bytes) instead of individual sectors, especially if the file system thinks in terms of blocks instead of sectors. I don't see the value of encrypting below the granularity of what the OS is ever going to write to disk.
