I stumbled across my own answer (see below). SIS was only used for RIS and WDS 2003 running in mixed mode. It is not supported moving forward, so it definately isn't something I am even going to test for moving into production.
"Since both legacy and mixed modes allow for deploying RISetup- and RIPrep-based images of Windows, you may want to bear one thing in mind. Historically, RIS used a component called Single Instance Storage (SIS) in order to optimize image storage on disk. SIS, which later shipped as a part of Windows Storage Server 2003, utilized a service called Groveler, which runs in the background on RIS (and WDS) servers, looking for identical files. If the size and hash of any files match, SIS saves a copy to its own SIS Common Store folder and then creates a hardlink to each of the original versions it found.
SIS is designed to minimally impact processor utilization while enabling significant storage savings. It was a great concept that was used first by RIS and then broadly on the Windows Server platform. But SIS is no longer used for WDS going forward.
Since WDS on Windows Server 2003 running in native mode—and always on Windows Server 2008—utilizes WIM images for setup, it has its own compression and—more importantly—its own single instance file storage model, and it doesn't utilize SIS at all. The Image Store replaces the storage model used by RIS with a new WIM-based design for WDS. Additional information about SIS is available at go.microsoft.com/fwlink/?LinkId=120302."