For certain systems, ISO+separate audio tracks with CUE was the preferred format
Now I understand part of what I was missing. Thanks! The only CD based systems I've worked on significantly are the PS1 and PC. So I just hadn't encountered the ISO+CUE format. If I'm understanding the bottom line summary, it would be.
ISO = single track disk image with 'user data' only. It discards the sector headers, subchannel data, and error checking ECM data, leaving only 2048 bytes of 'user data' per sector. Since the ISO9660 format is standardized, these only require a CUE if the original CD was multi-track.
BIN,IMG = Raw disk image containing 'user data', sector header, and ECM data, but discarding the subchannel data, thus leaving 2352 bytes of data per sector. These always require a CUE-like file to record internal structure and track breaks.
MDF = Like a BIN, but with the option of including the subchannel data as well. Requires an MDS file to record internal structure and track breaks.
Playstation CDs use non-basic modes, so they are not compatible with the ISO format, but some other CD based consoles are. Also, since some PS1 games from the PAL (Euro) region used a copy protection which stored vital game data in the subchannel data (aka LibCrypt), such games require a BIN-like format plus subchannel data.
Hopefully, I have my thinking straight-ish now