I worked out I could have v1.60 and v1.62 installed simultaneously and only using less than 800MB extra of my hard drive (quite handy, considering my OA folder with mods is up to 50GB now!). Hopefully this approach will be useful to others, particularly those who need to test to compare 1.60 to 1.62, or for users who still need 1.60 to play on certain servers but want to use 1.62 when playing offline.
First, you need to install Sandboxie http://www.sandboxie.com/index.php?DownloadSandboxie
Once you've installed it, open Sandboxie Control and click on Sandbox - Set Container Folder to set the drive and path it will use (not really important as long as it has a few GB free). If you don't use Sandboxie for anything else, you can just use the DefaultBox, otherwise click on Sandbox - Create New Sandbox and give it a name (e.g ArmA) and set it to copy settings from the DefaultBox. Then right-click on the box you'll be using (DefaultBox or Arma), then on Sandbox Settings and under Recovery disable "Immediate Recovery" and under Delete disable "Automatically delete".
Then right click on the ARMA2OA_Update_162.exe and select Run Sandboxed and select the box you'll be using. Once the update has finished, go to the Sandboxed folder (e.g. my path is C:\Sandbox\ArmA\drive\D\games\ArmA 2 Operation Arrowhead") which will contain ONLY the files that have been updated, leaving your real 1.60 installation untouched.
Next, install LinkShellExtension http://schinagl.priv.at/nt/hardlinks...t.html#contact and go to your ArmA2OA 1.60 folder (e.g D:\games\ArmaA 2 Operation Arrowhead), right-click on it and select Pick Link Source. Now create a new folder (e.g. D:\games\X) and then inside that folder, right-click in the empty right pane and select Drop As - Symbolic Link Clone. This will create a copy of the original folder but containing only links to the original files, so taking no additional space on your HDD. Rename this folder (e.g. to Arma2OA 1.62) and then move it wherever you want it (I just moved it to D:\games\) and then you can delete the empty X folder.
Then go to your Sandboxed folder (e.g. C:\Sandbox\ArmA\drive\D\games\ArmA 2 Operation Arrowhead and copy the files folder by folder and paste them into the appropriate folders in your new clone folder (e.g. D:\games\ArmA2OA 1.62), starting with Expansion\ADDONS. If you find it doesn't properly paste all or some of the files, leaving them as 0Kb links, when you paste even if it doesn't work properly it will leave the files it should have pasted over highlighted, so just press delete to delete the highlighted files and paste them again, which will definitely work. For the other folders in Expansion (beta, BattlEye and dta) you can just delete them in the cloned folder and paste the folders from the Sandboxed folder. Then copy and paste the files from the Sandboxed Common folder into the cloned Common folder (using the same trick to delete the 0Kb files if necessary) and then finally do the same with the files in the root of the Sandboxed folder (containing ACR_Lite_readme.txt, arma2oa.exe, etc).
Now you have your untouched 1.60 installation and the 1.62 folder that only contains the new/updated files (about 750MB), with transparent (to the OS and ArmA2) links to all the other files in the 1.60 folder.
Bear in mind, when installing the beta patches it uses the path in the registry, so I suggest you change this to point to the 1.62 folder (Local Machine\Software\WoW6432Node\Bohemia Interactive Studio\ArmA 2 OA\Main). You can always copy the beta and BattlEye folders to your 1.60 Expansions\ folder afterwards if you want.
You can install any @mod folders that are specific to 1.62 (i.e @okt_noblur, @okt_noblurBeta, @PR) to the 1.62 folder (delete the links to the 1.60 versions of those mods first if they exist) and any mods that you want to use with both (or only 1.60) to the 1.60 folder. Any new mods you add to the 1.60 folder won't automatically have links created in the 1.62 folder, so you'll need to right-click on the @mod folder, select Pick Link Source, go to your 1.62 folder and right-click and select Drop As - Symbolic Link after you install each one. You can do this with multiple folders at a time, so if you realise you've forgotten to do this for a few mods and can remember which ones they were, you can quickly fix it.
You can create two profiles in Spirited Machine's Arma II Launcher and on the Launch Options tab point to the 1.60 exe and beta exe for one profile and the 1.62 exe and beta exe for the other, making it easy to launch one or the other with whichever mods you want. You can create desktop shortcuts with this tool as well, making it even quicker to launch the one you wish.
Bonus Step: It's worth changing a couple of the cloned folders to Junctions, rather than Symbolic Links, as then any new files you add to the original folder will be available in the cloned folder as well.
The folders I suggest you do this for are Campaigns, Keys, Missions, MPMissions and Userconfigs. It's also worth doing for mods that you might change a lot, such as COWarMod, but most mods you won't be messing around with, so they're fine as Symbolic Links. So go to your cloned folder (e.g. D:\Games\ ArmA2 OA 1.62) and delete those folders (which are only links to the original folders).
Then go into your 1.60 install folder (e.g. D:\Games\Arma 2 Operation Arrowhead) and right click on each of those folders, select Pick Link Source then go to your cloned folder, right-click and select Drop As - Junction.
Bear in mind that with Junctions, if you modify/delete a file in the cloned folder it will be modified/deleted in the original folder too, but there's no reason why you'd want the contents of these folders to differ between 1.60 and 1.62 so it's not really a problem.
It's a bit of a shame that the @mod folders aren't all in one subfolder, as then we could make a Junction to that and any mods added to it in the 1.60 folder would be available in the 1.62 folder but that's not possible so you'll just have to remember to make Symbolic Links to any new mods you add.