Hello Everyone,
My experience out on an organic farm has shaped my opinion on this topic, though it is also fused with my outlook and other knowledge.
My approach is as follows:
1. Pee outside
2. Poo outside in certain areas. For now it is in areas of the woods that are designated for this, away from any water or homes. The poo is usually all broken down and back to soil in a matter of weeks. In the future, when I have land, designate a portion of the garden for this that and use it for this purpose when it is out of rotation... i.e. a rest year/s.
3. Do the least harm with cleaning up. I currently use a small hand bidet that you can get online for about $10, it simply sprays a small stream of clean water and then I use a small towel to dry. After much use I also use my hand to to clean the area while spraying (originally I didn't because I thought that was gross) and then wash my hands afterwards.... this is similar to showering though and it's more of a mental change then a hygienic.
4. By not using toilet paper we save trees and the plastic wrapping that it almost always comes in. If you read No Impact Man, or do your own research on the topic, you find out that most (he cited 80% as I recall) pollution comes from manufacture. So, while it's true that some toilet papers compost easily there is still much unneeded pollution: logging machines, logging fuels, transportation, processing, packaging, and more transportation in various places.
5. I think in the future though I will build a small toilet frame for the woods/garden because squatting can be precarious at times. Just a little platform that you can move from place to place outside when you go.
6. I also think a series of small color poles might be nice for the woods, so that if you have others on the land you can simply instruct them that if they see a bunch of color poles in an area that that it toilet area and to walk around it.
All the best!