By sharpening, I just meant make the falloff sharper so that the blend isn't spread out over such a large area. This causes creasing but that is what you want for an elbow or knee.

Most artists create the mesh with this in mind and concentrate extra vertices around the joints. The arm skinning app I mentioned earlier that I did in 1998 shows this. In that app you can also see the problem when you twist the bones.

RE: "adding extra bones" You are right, it is a bit expensive and most people just don't bother. We just live with the limitations. But in the right case or for a key character it works well. I have used an extra bicep bone to have a procedural muscle bulge for instance and it looked great.

But I think you have all the tech right. From now on it is just an art and design problem. Build the model right and adjust the weights so it looks as good as possible.

Another technique that helps is to build the model at the half way of the max deflected position and weighted there. That way the error will be more evenly distributed.