FWIW, as a hope to get this solution adopted as the "official" Mercurial solution to large binaries in Mercurial, I have started a fork called "HugeFiles" (the name change is because one of the big responses regarding getting it adopted is that a Kiln-specific name was not appropriate and the term "kbfiles" leads one to wonder, "Why am I using this tool for files that only have sizes in the kilobyte range?" -- I actually hope that FogCreek and I will reconcile these divergent development branches at some point; HugeFiles should be completely compatible with Kiln).
It's located on BitBucket here:
It's still in the early stages now; you can watch the site for updates. Also note that the versions here may or may not be in synch with what FogCreek is shipping (particularly because I work a lot on the extensions myself and the changes I make don't immediately go back to FogCreek and get incorporated), but it can be a solution for anyone who is desperate for some way to handle large binaries in their Mercurial repositories.
For proof-of-concept testing, there is a store there that just uses anonymous FTP with a hard-coded path of /bfiles for the store location. It's not much, but it's way to see it working on your own server and give you a start to develop a real FTP share (or SSH if you want -- there is already an httpstore as well).