The eval -- "%%EXPANSION{%arg{1}}" trick is awesome — with %file, %sh{}, %opt{}. The only problem is that the content inside %EXPANSION{} must balance braces (and in correct order too).
For %file, I would recommend eval -- reg dquote "%%file<%arg{1}>" — and then the filename needs to balance angular brackets instead. Those are unlikely to appear in filenames.
I’m doing this in k9s0ke-shlib / Kakoune commands (k9s0ke-file2reg, k9s0ke-file2opt, def-sh-with-prelude-cmd).