Don't expand empty [paths] so later interpolation can do the right thing.
Example:
[paths]
default =
default-push = %(default)s
#!/bin/sh
#
mkdir t
cd t
hg init
echo 0 > a
echo 0 > b
hg ci -A -m m -d "0 0"
touch nottracked
hg locate a
hg locate NONEXISTENT
hg locate
hg rm a
hg ci -m m -d "0 0"
hg locate a
hg locate NONEXISTENT
hg locate
hg locate -r 0 a
hg locate -r 0 NONEXISTENT
hg locate -r 0