Today I tried to clone a repository to an existing directory but MacHg didn't let me do this. It complaint about the directory already existing. While I now understand that this is a limitation of Mercurial (see http://mercurial.selenic.com/bts/issue1462 ) you should at least allow this for empty folders (works with the command line client).
And perhaps a clearer error message (like "Mercurial can't clone into an existing, non-empty directory.") may be helpful in this case.