Note: I just updated to the update released December 10th for the droid and was able to reapply the update.zip.

The instructions are here

• Download this file and rename it update.zip on the sdcard.
• turn off the phone
• turn on the phone holding down the x key on the keyboard
• When you see the Motorola symbol, press Vol+ and Camera buttons together.
• An onscreen menu will appear, use the d-pad to navigate to update.zip and type return to apply
• After the phone reboots, Go to Settings -> Applications -> Development and enable USB Debugging
• Connect the droid to your desktop, download the sdk
• unpack the sdk and navigate to tools directory
• as root/administrator run adb start-server
• next run adb shell
• su to root /system/bin/su
• remount the root filesystem rw

  
# mount
rootfs / rootfs ro 0 0
tmpfs /dev tmpfs rw,mode=755 0 0
devpts /dev/pts devpts rw,mode=600 0 0
proc /proc proc rw 0 0
sysfs /sys sysfs rw 0 0
tmpfs /sqlite_stmt_journals tmpfs rw,size=4096k 0 0
none /dev/cpuctl cgroup rw,cpu 0 0
/dev/block/mtdblock4 /system yaffs2 ro 0 0
/dev/block/mtdblock6 /data yaffs2 rw,nosuid,nodev 0 0
/dev/block/mtdblock5 /cache yaffs2 rw,nosuid,nodev 0 0
/dev/block/mtdblock0 /config yaffs2 ro 0 0
/dev/block//vold/179:1 /sdcard vfat rw,dirsync,nosuid,nodev,noexec,uid=1000,gid=1015,fmask=0702,dmask=0702,allow_utime=0020,codepage=cp437,iocharset=iso8859-1,shortname=mixed,utf8,errors=remount-ro 0 0
# mount -o remount -o rw -t yaffs2 /dev/block/mtdblock4 /system


  I don’t know if the device will always be the same (/dev/block/mtdblock4), best to check first.
• now make a copy of sh and call it su-something or replace su

  
# cd /system/bin
# cat sh > su
or
# cat sh >su-fake
# chmod 4775 su
or
# chmod 4775 su-fake
# exit