To prevent oversaturation, ATAR must be a rank. ATAR being a rank actually makes the system much more transparent than a score and is arguably a good thing since aggregates are disgustingly low, e.g. 300/500 for 80 ATAR.
Internals is a fair concept, and if it ruins relationships, maybe they weren't good friends in the first place lol.
Banking everything on external tests is a very bad idea since various one-off mishaps can make or break someone's future. Rather I would advocate for the HSC to be split into four standardised tests starting from term 1 yr 12, with each successive assessment worth more. However, frankly, NSW is not bothered to spend the money or time to organise that.