So the IDE or whatever would basically traverse up the filesystem looking for the first directory with a .git subdirectory? I've never encountered something like that but I suppose it's possible. Do you know of any IDEs specifically that do that?

At any rate, I didn't know renaming the .git directory was possible. Do you have to add the --git-dir option to every subsequent git command? Sounds like a pain but my dotfiles change rarely enough that I guess I could live with it if I had to.