Well, I recently got to spend a night at the rather-darn-cool "Getaway Boston" tiny house compound, and lo and behold, they had a dry flush toilet.
While they are incredibly easy to use, I'm still not sure if I'd go this route (namely because of the plastic-based disposal bags you need to use). That said, its unbelievably simple as an install a system like this, it works like a charm, and the toilets themselves are rather traditional in their look (so as to not scare the already squeamish).
Take a look at this video.... its explains, and shows. quite a bit more....
-Derek "Deek" Diedricksen