Yeah, the whole question of applying patches needs investigation. The Mercurial book (at least as far as I've read) assumes everyone collaborating on a project just pushes their own commits and merges everyone else's.

But I just typed "hg help import" and it looks like it would probably do the right thing... noting that it also supports the "--similarity" argument and can be invoked as "hg patch". I'd suggest also using "--no-commit" and doing the commit manually as before, after checking to make sure that it applied as expected.