As described on MultipleCommitters, one way of collaboration (the CVS-like model) is setting up a central [:Repository:repository] every user pushes his changes to and pulls the others' changes from. This page describes how to create such repositories accessible via a shared ssh account without needing to give full shell access to other people.
mercurial-server provides the most complete and easiest-to-use solution to this problem for hosting a collection of repositories on Unix systems. Installing mercurial-server creates a new user, "hg", which will own all the repositories to be shared. Giving access to a new user is as simple as adding their SSH key to a special repository and pushing the changes. mercurial-server can enforce fine-grained permissions and logs all events.
There are two alternative systems for achieving the same end, though both require more work to maintain:
A python script available in [http://www.selenic.com/repo/hg-stable/raw-file/tip/contrib/hg-ssh contrib/hg-ssh]. Allowed repositories are managed directly in the authorized_keys file. Look at the start of the script for usage instructions. mercurial-server is descended from hg-ssh.
How these work
When accessing a remote repository via Mercurial's ssh repository type, hg basically does a
$ ssh hg.example.com hg -R /path/to/repos serve --stdio
and relies on ssh for authentication and tunneling. When using public key authentication, ssh allows limiting the user to one specific command, which can do all the sanity checks we want and then calls hg just like ssh would in the example above. Note that every user gets his own private key and his own entry in authorized_keys, which allows the scripts to distinguish between different users and thus enforce e.g. access permissions.