diff -r 7034365089bf -r 87e8440964a0 mercurial/localrepo.py
--- a/mercurial/localrepo.py	Fri Jul 06 18:45:26 2012 +0900
+++ b/mercurial/localrepo.py	Fri Jul 06 18:45:27 2012 +0900
@@ -37,14 +37,14 @@
 
     def __init__(self, baseui, path=None, create=False):
         repo.repository.__init__(self)
-        self.root = os.path.realpath(util.expandpath(path))
+        self.wopener = scmutil.opener(path, expand=True)
+        self.wvfs = self.wopener
+        self.root = self.wvfs.base
         self.path = os.path.join(self.root, ".hg")
         self.origroot = path
         self.auditor = scmutil.pathauditor(self.root, self._checknested)
         self.opener = scmutil.opener(self.path)
         self.vfs = self.opener
-        self.wopener = scmutil.opener(self.root)
-        self.wvfs = self.wopener
         self.baseui = baseui
         self.ui = baseui.copy()
         # A list of callback to shape the phase if no data were found.