man 5 hgrc implied you need to use external tools to do CRLF translation.
This is no longer true; win32text provides a much better in-process alternative.
#!/bin/sh
cat >> $HGRCPATH <<EOF
[extensions]
convert=
[convert]
hg.saverev=False
EOF
hg init orig
cd orig
echo foo > foo
echo bar > bar
hg ci -qAm 'add foo and bar' -d '0 0'
hg rm foo
hg ci -m 'remove foo' -d '0 0'
mkdir foo
echo file > foo/file
hg ci -qAm 'add foo/file' -d '0 0'
hg tag -d '0 0' some-tag
hg log
cd ..
hg convert orig new 2>&1 | grep -v 'subversion python bindings could not be loaded'
cd new
hg out ../orig
echo '% dirstate should be empty:'
hg debugstate
hg parents -q
hg up -C
hg copy bar baz
echo '% put something in the dirstate:'
hg debugstate > debugstate
grep baz debugstate
echo '% add a new revision in the original repo'
cd ../orig
echo baz > baz
hg ci -qAm 'add baz'
cd ..
hg convert orig new 2>&1 | grep -v 'subversion python bindings could not be loaded'
cd new
hg out ../orig
echo '% dirstate should be the same (no output below):'
hg debugstate > new-debugstate
diff debugstate new-debugstate
echo '% no copies'
hg up -C
hg debugrename baz