I'm sure there would be some speedup, the question is whether it would be worth it (and I suppose that can only be adequately be assessed by the developers, who now have to maintain C code instead of Python).

But for some perspective from a former Mercurial developer: lots of the more performance-sensitive code has already been rewritten in C. Rewriting the rest of it would simply be a question of diminishing returns. One thing that would improve is hg's startup time; starting up Python just takes a while, which kind of sucks for command-line programs like VCS clients that tend to have many short-running invocations.