<p>I have two separate mercurial repositories. At this point it makes sense that they "become one" because I want to work on the two projects simultaneously.</p>

<p>I'd really like the two projects to each be a subdirectory in the new repository.</p>

<ol>
<li>How do I merge the two projects?</li>
<li>Is this a good idea, or should I
keep them separate?</li>
</ol>

<p>It seems I ought to be able to push from one repository to the other... Maybe this is really straight forward?</p>

If you aren't using the same code across the projects, keep them separate. You can set
your
personal repository of each of those projects to be just a directory apart. Why mix all the branches, merges, and commit comments when you don't have to.
About your edit:
Pushing from One repository to Another. You can always use the
```
transplant
```
command. Although, all this is really side stepping your
desire
to combine the two, so you might feel uncomfortable using my suggestions. Then you can use the forest extension, or something.
```
```
hg transplant -s REPOSITORY lower_rev:high_rev
```
```