Write a program that scans the file system to identify and report duplicate files, handling real files, extensions, and file reading operations.

Focus on outlining a clear approach for scanning the file system, emphasizing how you will handle real files and their extensions. Start by discussing how you would traverse directories and read file contents, considering edge cases like symbolic links and permission issues. Explain your strategy for identifying duplicates, such as using hash functions to compare file contents efficiently. Be prepared to discuss how your program will report findings, including potential user-friendly output formats. Finally, consider performance implications and how you would optimize the scanning process for large file systems.