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
hg init
echo a > a
hg ci -Amadd
chmod +x a
hg ci -mexecutable
hg up 0
rm a
ln -s symlink a
hg ci -msymlink
hg merge
echo % symlink is left parent, executable is right
if [ -L a ]; then
echo a is a symlink
readlink a
elif [ -x a ]; then
echo a is executable
fi
hg update -C 1
hg merge
echo % symlink is right parent, executable is left
if [ -L a ]; then
echo a is a symlink
readlink a
elif [ -x a ]; then
echo a is executable
fi