diff --git a/rust/rhg/README.md b/rust/rhg/README.md
--- a/rust/rhg/README.md
+++ b/rust/rhg/README.md
@@ -1,4 +1,77 @@
-# rhg
+# `rhg`
+
+The `rhg` executable implements a subset of the functionnality of `hg`
+using only Rust, to avoid the startup cost of a Python interpreter.
+This subset is initially small but grows over time as `rhg` is improved.
+When fallback to the Python implementation is configured (see below),
+`rhg` aims to be a drop-in replacement for `hg` that should behave the same,
+except that some commands run faster.
+
+
+## Building
+
+To compile `rhg`, either run `cargo build --release` from this `rust/rhg/`
+directory, or run `make build-rhg` from the repository root.
+The executable can then be found at `rust/target/release/rhg`.
+
+
+## Mercurial configuration
+
+`rhg` reads Mercurial configuration from the usual sources:
+the user’s `~/.hgrc`, a repository’s `.hg/hgrc`, command line `--config`, etc.
+It has some specific configuration in the `[rhg]` section:
+
+* `on-unsupported` governs the behavior of `rhg` when it encounters something
+  that it does not support but “full” `hg` possibly does.
+  This can be in configuration, on the command line, or in a repository.
+
+  - `abort`, the default value, makes `rhg` print a message to stderr
+    to explain what is not supported, then terminate with a 252 exit code.
+  - `abort-silent` makes it terminate with the same exit code,
+    but without printing anything.
+  - `fallback` makes it silently call a (presumably Python-based) `hg`
+    subprocess with the same command-line parameters.
+    The `rhg.fallback-executable` configuration must be set.
+
+* `fallback-executable`: path to the executable to run in a sub-process
+  when falling back to a Python implementation of Mercurial.
 
-This project provides a fastpath Rust implementation of the Mercurial (`hg`)
-version control tool.
+* `allowed-extensions`: a list of extension names that `rhg` can ignore.
+
+  Mercurial extensions can modify the behavior of existing `hg` sub-commands,
+  including those that `rhg` otherwise supports.
+  Because it cannot load Python extensions, finding them
+  enabled in configuration is considered “unsupported” (see above).
+  A few exceptions are made for extensions that `rhg` does know about,
+  with the Rust implementation duplicating their behavior.
+
+  This configuration makes additional exceptions: `rhg` will proceed even if
+  those extensions are enabled.
+
+
+## Installation and configuration example
+
+For example, to install `rhg` as `hg` for the current user with fallback to
+the system-wide install of Mercurial, and allow it to run even though the
+`rebase` and `absorb` extensions are enabled, on a Unix-like platform:
+
+* Build `rhg` (see above)
+* Make sure the `~/.local/bin` exists and is in `$PATH`
+* From the repository root, make a symbolic link with
+  `ln -s rust/target/release/rhg ~/.local/bin/hg`
+* Configure `~/.hgrc` with:
+
+```
+[rhg]
+on-unsupported = fallback
+fallback-executable = /usr/bin/hg
+allowed-extensions = rebase, absorb
+```
+
+* Check that the output of running
+  `hg notarealsubcommand`
+  starts with `hg: unknown command`, which indicates fallback.
+
+* Check that the output of running
+  `hg notarealsubcommand --config rhg.on-unsupported=abort`
+  starts with `unsupported feature:`.