forgot to rerun tests after changed backup extension to .orig.
thomas a.h. found this.
#!/bin/sh
hg init
echo 123 > a
hg add a
hg commit -m "first" -d "1000000 0" a
mkdir sub
echo 321 > sub/b
hg add sub/b
hg commit -m "second" -d "1000000 0" sub/b
cat sub/b
hg co 0
cat sub/b 2>/dev/null || echo "sub/b not present"
ls sub 2>/dev/null || echo "sub not present"
true