See IRC for context/discussion.
We currently hg pull -u but almost certainly don't need to. If there are merge conflicts in the working copy for some reason, hg pull -u can invoke diff programs like vimdiff during merge and do other silly things. Theoretically, we shouldn't need -u, but we should verify this:
They shouldn't interact -- T10753 is mostly about clustering. When Diffusion and the daemons need to ask questions about a Mercurial repository, they're supposed to issue a Conduit call so Phabricator can get an answer by asking another host if it needs to. In a few cases, they currently just issue an hg command, which only works if the repository is present (and up to date) on local disk.
The other side of the Conduit call still issues an hg (or git, or whatever) command in most cases, but sending everything through Conduit means a different host (one which actually does have a working copy) can give us the answer if necessary.
Ah ok I was just thinking that if anything happened to be depending on the state of the working copy then removing the -u argument could affect those.