The best way to store backup data to blu-ray disks
 

I am backing up several files to blu-rays. The ISO format has severe limitiations. Can I use a different filesystem on the blu-ray itself?

If not, can which is the best choice for a file-based filesystem:

tar.xz: Hard to extract a single file right? Very compatible for Linux (probably doesn't matter to me)
truecrypt: Not very good compression right? But I can mount it and read files directly.
7zip: Has compression and encryption but I can't mount it, right? Are the compression/encryption algorithms even that good anyway?

The common problem with all of these options is how to handle big files. I wouldn't mind spliting a 10GB file across two disks if it meant I could burn the files in two disks instead of three. However, I do not want to insert ten disks if the files I really need are just in two of the ten disks. I hope that makes sense

Which option would you choose?

I would use:
http://en.wikipedia.org/wiki/Universal_Disk_Format