I can confirm that the given patch fixes the problem for me. I built a binary
using patch from GnuWin32 - I don't know if that is the version used in the
official binaries.

The patch seems logically correct to me. In my (naive) view, hg should work in
binary mode at all times internally, translating CRLF only when storing files
externally for the end user. This approach is the one taken by Subversion, and
in my experience works well.