Looks good, but as a public interface probably it needs a few lines of
comment in front of the function's definition to describe what it is used
for. Perhaps like...
/*
* Read the index file that is potentially unmerged into given
* index_state, dropping any unmerged entries. Returns true is
* the index is unmerged. Callers who want to refuse to work
* from an unmerged state can call this and check its return value,
* instead of calling read_cache().
*/
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