Use both: a specialized plugin and multisite. There are plugins doing that (I’m the developer for one, Multilingual Press, but there are others).
The main advantage is indeed interoperability: you can activate language and theme specific other plugins per sub-site, you don’t get any data hidden in custom post types or post meta fields, and you can use regular URLs, even different URL structures on each site.
Be aware, some poorly written themes and plugins will not work with any multi-language plugin. Custom post types and taxonomies registered in themes are really hard to translate, because they aren’t accessible across the network. Also make sure to activate plugins doing that as network plugins, not per site, if you need those translated.
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