My hgrc, with these plugins and options I basically replicated a close to git workflow.

.hgrc

[ui]
verbose = True
merge = diffmerge

[pager]
pager = LESS='FSRX' less

[extensions]
pager =
color =
fetch =
hgext.record=
hgext.purge=
hgext.shelve=~/.hgext/hgshelve/hgshelve.py 
hgext.extdiff =

[extdiff]
cmd.diffmerge = ~/bin/diffmerge

[merge-tools]
diffmerge.executable = ~/bin/diffmerge
diffmerge.args = -merge -result=$output -t1="Local Version" -t2=$output -t3="Other Version" -caption=$output $local $base $other
diffmerge.binary = False
diffmerge.symlinks = False
diffmerge.gui = True