With hg 1.7.5 on Windows 7 I performed a non-core checkout:
hg clone http://hg.python.org/cpython
The eol extension is enabled in global settings. I looked at things a bit, opening some files and using the Tortoise Hg Repository Explorer. But made no actual changes. Running hg diff produces a large amount of output with almost all the *.decTest and most of the Windows build files (*.mk, *.sln, *.vcproj, *.bat) showing as changed but with identical text.
I've had problems like this with Hg before (http://mercurial.selenic.com/bts/issue2287). The situation can be fixed by hg update to another version and then back to default.