Maximum linked model depth? How deep can you link models in Blender? I mean, what if you were to link model C within model B, which is then linked within model A? Would that work?

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I'm working with models created in Lego/LDraw, and it could potentially save space if the individual Lego parts were stored outside the model and instanced instead.
No that would not work, you can only link non linked objects (so just the objects you made) in the file you want to link.