I am trying to contribute to a project that uses Subversion. I used Mercurial and its hgsubversion extension to clone the repo. My work takes place on a feature branch.
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Mercurial as a few different branching modes: http://stevelosh.com/blog/2009/08/a-guide-to-branching-in-mercurial/
The one you're describing is 'named branches', which is the most popular when you're working with a repo that's accessed only via mercurial (or hg-git).
However, when you're using hg-subversion so that you're pushing changes to/from subversion, which only nominally has branches, you're better off keeping all of your mercurial changes in the 'default' named branch, and using the 'clones and branches' pattern (which I prefer anyway).
Specifically, that message Sorry, can't find svn parent of a merge revision. isn't a descendant of a revision that has a direct match in subversion.
Were I you, I'd reclone from svn, and then move my work into that repo's 'default' branch with the 'transplant' command (packaged extension). If you want multiple features in parallel w/ hg-subversion use separate clones (they're so cheap), as it's more in line with how subversion thinks about branches.