The only chance to cleanly send errors is at the start of a chunk. So what about
using something like

try:
    prepare chunk
except StandardError:
    log error
    send error
    (see 769be3c57564 for an example)
else:
    try:
        send chunk
    except StandardError:
        log verbosely, ring alarm bell, whatever
        (and try the best on the client side, as before)

Clients not understanding these error chunks are as (un)happy as before, but
newer clients can provide a better error message to the user.

> Most of the other errors can be seen by pointing a browser to the repo
Not the ones where you have to push some content.

The biggest problem is for the changegroup command (the one that sends a stream
on clone/pull), if a traceback happen during this command it will be "embedded"
in the stream. Detecting this is quite hard. (Most of the other errors can be
seen by pointing a browser to the repo)

what about an additional header that will give a mercurial error number that the
client would know about:
HTTP/1.1 200 Script output follows
Date: Sun, 14 Jan 2007 23:22:30 GMT
Server: Apache
X-Mercurial-ErrorCode: 42
Transfer-Encoding: chunked
Content-Type: text/html; charset=ANSI_X3.4-1968
...

Someone (sorry don't remember who) proposed using some kind of multipart content
type, and send the error message in another part.

I don't know if it's possible as I'm not familiar with mime types.

Currently a server-side error (like a bad permission) produces the following
error on the client side when cloning by http (apache server) :
abort: consistency error adding group!
transaction abort!

Such permissions error may not be an uncommon error and as such, it would be
good to raise some informative error on the client side. 
It may perhaps be possible, when  RevlogError(_("consistency error adding
group")) is raised to have a look at the incoming chunk of data to check if the
client get a backtrace, and then inform the user...