Don't expand empty [paths] so later interpolation can do the right thing.
Example:
[paths]
default =
default-push = %(default)s
#!/bin/sh
hg init 1
echo '[ui]' >> 1/.hg/hgrc
echo 'timeout = 10' >> 1/.hg/hgrc
echo foo > 1/foo
hg --cwd 1 ci -A -m foo
hg clone 1 2
hg clone 2 3
echo '[hooks]' >> 2/.hg/hgrc
echo 'changegroup.push = hg push -qf ../1' >> 2/.hg/hgrc
echo bar >> 3/foo
hg --cwd 3 ci -m bar
hg --cwd 3 push ../2