My concern is simple. (1) Someone adds some fixes to BuildSystem, commits and pushes. (2) Someones uses PETSc with the BuildSystem subrepository does a pull in PETSc and NEVER gets the stuff that was put into BuildSystem.

Huuuuuuuuuuh? How would they "NEVER" get the stuff put into BuildSystem? The solution would be to "cd into Buildsystem and do an 'hg pull' there." How is that any different from our current advice of "pull the newest BuildSystem changes?" Sean