Mercurial, LaTex and my Thesis

I use Mercurial (and bitbucket.org) to track changes to my thesis (yes, I’m writing up, scary thought). Quite naturally, I use LaTeX to typeset my thesis. For LaTeX documents I prefer not have a fixed column width where line breaks are inserted manually. This makes using Mercurial’s standard diff somewhat pointless because it will only show me paragraphs that I edited. Meet wdiff: “The program wdiff is a front end to diff for comparing files on a word per word basis. A word is anything between whitespace. This is useful for comparing two texts in which a few words have been changed and for which paragraphs have been refilled.” I use the following options in order to use wdiff.

[extensions]
hgext.extdiff =

[extdiff]
cmd.wdiff  = wdiff
opts.wdiff = -a -l

I couldn’t get colour output to work, suggestions welcome.