Howto: Quickly Root your Android G1 Phone in 14 Steps

The first step is to downgrade so you can obtain root access.

1. Download the RC29 NBH file if you are in the US or the RC7 NBH file if you are in the UK.
2. Place this file on your sd card (it is best if you format the card to FAT32 before this step, if you run into errors try that).
3. Turn the device power off and make sure your sd card is inserted.
4. Hold down the camera button while you turn on your phone to enter bootloader.
5. Press the power button to start flashing the image file.
6. After it finishes, press the trackball and perform a soft reset by pressing "Call" + "Menu" + "End" to reboot. 
7. Once your phone boots to the desktop hit the key twice and then type "telnetd" and press again.
8. Download Android Telnet client (ConnectBot, other telnet clients do not seem to work properly when initially gaining root), run it and connect to "localhost". If you are unable to connect, try steps 1 and 2 over again until you can. Also, you can try doing a factory wipe (alt+w in the recovery menu) and retrying if all else fails.
9. Download JF's US G1 Cupcake 1.51 ROM for US users or JF's UK G1 Cupcake 1.51 ROM for UK users or JF's ADP Cupcake 1.51 ROM if you have an ADP1 to /sdcard and rename it to update.zip (when you are done it should be "/sdcard/update.zip").
   • To make sure the update is named correctly, in the terminal you opened earlier, type
     • ls /sdcard/update*
   • If you see a file named update.zip, then it is named correctly. However, if you see a file named update.zip.zip, type the following command
     • mv /sdcard/update.zip.zip /sdcard/update.zip
10.  Download the modified recovery and unzip it. Place the file "recovery_testkeys.img" in /sdcard
11. In the terminal you opened earlier (with root access) Enter the following commands in to flash the modified recovery
    • mount -o remount,rw /dev/block/mtdblock3 /system
    • rm -f /system/recovery.img
    • flash_image recovery /sdcard/recovery_testkeys.img
12. Reboot your phone (completely, do not enter recovery yet or your neighbors dog might die)
13. Once fully rebooted, power off your phone (hold power and select "Power Off"), and hold down home while you turn the power back on.
14. When you enter the recovery console (which should say "using test keys" if your modified recovery was flashed correctly) hit "alt+L" and then "alt+S" on your keyboard. This will flash the update.zip file that you downloaded and placed there. If you have any problems with this step you missed something above.