Insert standard, long-form disclaimer here - the translation of which is this: you, and you alone, are responsible for what you do to your phone. Not knowing potential consequences is no excuse. Modding voids the manufacturer's warranty and can easily destroy your handset. It is a shameful, sordid, unholy waste of your time.
You will find no tech support or culpability for bricking at PD.
Anyway, though I've decided to be pretty vague about how this stuff is accomplished, I figure the least I can do is point you all to the resources I've found most helpful and offer some notes on my experiences. A Google search brings back a confusing maze of posts that overlap and link to different files - many of which are outdated.
So, here is the best tutorial I have found: How-to- Root, Hack, and Flash your G1 from the xda-developers forum.
You can follow it until you reach "And now, the last step!" This is the point where you choose an image (version of a modded Android) to run. Don't choose one there. For the best and latest, go to Haykuro's blog. His instructions pick up where I told you to stop in the first tutorial. Actually, step one in Haykuro's how-to is what you accomplished at the xda forums if you followed the instructions properly.
As Haykuro states, you will need to include the Alt+W step when flashing your first modded Android image. This WIPES your phone (everything go bye-bye, SD and SIM data excluded). But future updates should not require this. Still, the water is murky, the changes are swift, and you never know what might happen in the modding world. I was happily running the JF hack, thinking I'd be auto-updated with the most recent images indefinitely. Then JF wrote a post referring people to Haykuro - as he is busy with other projects.
A wipe is often the best way to solve modding problems, which you will run into if you decide to play around with this stuff. So regardless of what the latest image promises, be prepared to lose it all. Search for Nandroid if you want complete phone back-ups. I'll get to that in another post.
Clicking on Haykuro's builds link will take you to a Google code project page. As of 04/28/09, the links near the top (ADP) are the official developer phone versions released by Google on 04/27/09. These are the most recent snapshot of Cupcake. (Thanks to @androidrights for letting me know what's up with all of these builds.)
The legacy builds below those are designated G for Google, H for HTC, and A2SD for those that are modified to allow installing apps to your SD card with a $1.00 program from the Market (free at xda devs). The Z versions support Chinese characters.
The A2SD builds require an ext2 partition after the FAT32 partition on your SD card. That scenario gave me trouble even though I have the partitions set up correctly, so I'm sticking with the top legacy build for now, and I'll be posting a video about it tonight. I'm keeping the partitions, and will give it a go later on.
These builds are dropping too fast for me to try every one immediately after release, and I don't have time to mess around this week. I'll get to the ADP early next week, or to whatever the image-of-the-moment is at that point.
Clarification: the ADP builds offer the latest tweaks and performance enhancements, and are therefore closer to the final Cupcake release. Still, they are not perfect and some features are non-functional. For example, root functions were quirky at first, but are being resolved quickly. These problems could vary from person to person. No IM other than Gtalk and the inability to delete messages in the email app are examples of some experienced problems. The legacy builds (which is what I'm running) also have root access and come from Cupcake, but are missing some recent adjustments. They too have issues.
Understand that updating your radio is done separately from the build, and by following the same steps - rename the radio file to update.zip, move it to your SD card, and reboot in recovery mode by pressing Home + Power. Then Alt+L, Alt+S.
SKIP THE ALT+W PART FOR RADIO CHANGES - it wipes your phone. The old radio, in case you want to fall back, is found under section II.c. here. The latest is at Haykuro's Google code page (look below the legacy images). Old radios work with the official RC33 and JF 1.42, the new radio works with Haykuro's images.
Last I heard from @johnashtonedgar - Android enthusiast and all-around knowledgeable guy on these builds - was that @Haykuro is working on including tethering and some other things that can't be found in the Google build in his own images. We'll keep you posted. Maybe that stuff will be available by my next mod.
If you haven't picked up on this yet, messing with your phone in this manner will cause UNEXPECTED RESULTS that can differ from the experiences of others. I have some apps that no longer work, and I cannot adjust the in-call volume. It also takes upwards of five seconds for my screen to rotate in response to the accelerometer - not because it 's delayed, but because it's doing this weird, jiggly, G-Shimmey dance transition thing. The Market forgot at least one of the apps I've purchased. Watch my video tonight.