Update for Android 1.5:

Root rights are no longer granted under the HTC 1.5 image.
Still, flash the HTC 1.5 image onto your dev phone first.
Then flash the custom kernel:
http://code.google.com/p/android-wifi-tether/wiki/ADP15KernelUpdate
from http://android-wifi-tether.googlecode.com/files/adp-1_5-kernel-update.zip

More detailed instructions can be found here:
http://2009.hfoss.org/Tutorial:_Tethering_and_Setting_up_an_Ad-Hoc_Network

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Root rights without a custom image can be obtained as follows:
http://android-dls.com/wiki/index.php?title=Magic_Root_Access
However, this still does not provide support for ad-hoc due to
kernel-level networking constraints (missing netfilter,iptables).