As you correctly said the complexity in restoring an incremental is the fact that all incremental media since last full backup would be required.
But if you have small backup window or limited media space (as in your case) - incrmental may be the only option.
with differential you need only last full and most recent differential.
if you do have sufficient DDS4 tapes to hold the largest differential, then go ahead with that.
I would avoid 'modified time' as it may lead to inconsistencies and is resource consuming. using archive bit on a windows system is much more faster and reliable. modified time is good for operating systems without archive bit - e.g. linux
to suggest a proper scheme... could you let me know the exact number of tapes you have with capacity