I also think it's a good idea to split up the client and the server into two separate repositories, and therefore decided to do a bit of experimenting.
The process of converting a repo from hg to git is well documented. It was simple, and I used the script here: http://permalink.gmane.org/gmane.comp.version-control.git/36601
Splitting a repo was a bit harder though, but after some searching, I came across this link here: http://log.emmanuelebassi.net/archives/2007/09/when-the-levee-breaks/
I had to make a few changes though.
yankee@dao:~/Projekten/Python/Smolt$ git filter-branch --tree-filter 'rm -rf benchmarks database .hgtags .project .pydevproject .settings smoon' HEAD
Rewrite d644ecb4d74fc0ca3245239dae97f051f825fdb1 (668/668)
Ref 'refs/heads/master' was rewritten
These refs were rewritten:
benchmarks client database doc GPL README smoon TODO
yankee@dao:~/Projekten/Python/Smolt$ git reset --hard
HEAD is now at dc4a914... 2007-12-11 Piotr Drąg (via firstname.lastname@example.org)
yankee@dao:~/Projekten/Python/Smolt$ git gc --aggressive
Done counting 3633 objects.
Deltifying 3633 objects...
100% (3633/3633) done
Writing 3633 objects...
100% (3633/3633) done
Total 3633 (delta 2463), reused 0 (delta 0)
Pack pack-79afd8906cd79a2c59c60cd152e71988d0384452 created.
Removing unused objects 100%...
yankee@dao:~/Projekten/Python/Smolt$ git prune
yankee@dao:~/Projekten/Python/Smolt$ ls -a
. .. client doc .git GPL .hg .hgignore .hgsigs README TODO
This had a few extra added benefits. I got rid of some cruft that happened to be sitting around. While rewriting a repository like this on a regular basis is not a good idea, there are a few times you need to do this. The documentation for git-filter-branch is also good for removing copyrighted files, and other nasty things, that you do not have the rights to distribute.
The end result is that I have a repo that is just the client.
UPDATE: I should mention, backup everything first! These changes are permanent to the working directory, and if you should decide you want to go back, you must make a backup. Remember, git does use hashes to identify updates, so if you need a particular version, save the hash. But that's just common git sense.