Pulled directly from Sitecore.Rocks.dll for installing packages -- check out "BehaviourOptions" to specify installation options.

Sitecore.Rocks.Server.Packages.PackageInstaller.cs

using Sitecore;
using Sitecore.Data.Engines;
using Sitecore.Data.Proxies;
using Sitecore.Install;
using Sitecore.Install.Files;
using Sitecore.Install.Framework;
using Sitecore.Install.Items;
using Sitecore.Install.Metadata;
using Sitecore.Install.Utils;
using Sitecore.Install.Zip;
using Sitecore.IO;
using Sitecore.SecurityModel;

namespace Sitecore.Rocks.Server.Packages
{
  public class PackageInstaller
  {
    public string FileName { get; private set; }

    public PackageInstaller(string fileName)
    {
      this.FileName = fileName;
    }

    public void Install()
    {
      Context.SetActiveSite("shell");
      using (new SecurityDisabler())
      {
        using (new ProxyDisabler())
        {
          using (new SyncOperationContext())
          {
            IProcessingContext context = (IProcessingContext) new SimpleProcessingContext();
            IItemInstallerEvents instance1 = (IItemInstallerEvents) new DefaultItemInstallerEvents(new BehaviourOptions(InstallMode.Overwrite, MergeMode.Clear));
            context.AddAspect<IItemInstallerEvents>(instance1);
            IFileInstallerEvents instance2 = (IFileInstallerEvents) new DefaultFileInstallerEvents(true);
            context.AddAspect<IFileInstallerEvents>(instance2);
            Installer installer = new Installer();
            installer.InstallPackage(FileUtil.MapPath(this.FileName), context);
            ISource<PackageEntry> source = (ISource<PackageEntry>) new PackageReader(FileUtil.MapPath(this.FileName));
            IProcessingContext previewContext = Installer.CreatePreviewContext();
            MetadataView view = new MetadataView(previewContext);
            MetadataSink metadataSink = new MetadataSink(view);
            metadataSink.Initialize(previewContext);
            source.Populate((ISink<PackageEntry>) metadataSink);
            installer.ExecutePostStep(view.PostStep, previewContext);
          }
        }
      }
    }
  }
}