Scenario 1: -update to changeset X -right-click on changeset X, select 'Merge with local' -click 'Next' => error message with 'abort: merging with a working directory ancestor has no effect'
This is as it should be.
Scenario 2: -update to changeset X -right-click on changeset X, select 'Merge with local' -expand 'Options', check 'Discard all changes from merge target (other) revision' -click 'Next', then 'Discard', 'Next', 'Commit Now', and 'Finish'. => changeset X has been merged with itself.
This results in an changeset merged with itself, visualization that doesn't make sense, and distressed users. :-)
I'm not sure if this is a TortoiseHg bug, or a Hg bug. If it's Hg just close it and I'll re-submit it to the Hg bugtracker.