Constructing suffix arrays in external memory is very useful, and we covered the topic in various blog posts (see here, here and here, here). Also, there is BEETL and RopeBWT for constructing BWT of very large read libraries in external memory.
Felipe Louza, a Brazilian researcher working in the field and a frequent commenter in previous blog posts, has a new update that our readers will find informative.
I have commited in GitHub a new version of a tool to construct generalized
enhanced suffix arrays.
The only related work (in mode 2) I know is https://github.com/BEETL/BEETL,
but they are limit to indexing strings of the same length.