I have a web application that communicates to Mercurial for Clones,Pull,Push,Commit,etc and I've been using the RepositoryConfiguration.setHgrcPath to supply the [auth] username/password but need to be able to use the keyring extension instead in order to keep the credentials encrypted.
Is this currently supported by JavaHg? If so, how do I configure this to work properly?
To support your use case you don't necessarily need to use the keyring extension. For example take a look at MercurialEclipse: The files with filenames "Hg*Client.java" are examples.
But to answer your question the keyring extension is not currently supported. Take a look at some other extensions for pointers on how one would create an JavaHg extension: for example https://bitbucket.org/aragost/javahg-ext-rebase
If the keyring plugin requires configuration only then you might be better off configuring it in your .hgrc/Mercurial.ini and using JavaHg as usual