You must use SVN to make this happen. To upgrade all you have to do is change the version number. If you want to run trunk, all you have to do is update the library by running a simple command. You can also add your plugins and themes to update using SVN.

I actually had been trying to do this for a few months. The part I was missing was putting the WordPress software in it’s own directory. The detailed instructions can be found on Joseph Scott’s blog.