I also keep my whole homedir in git, and it's great. My approach isn't to .gitignore, because I want to ignore almost everything -- I just add and commit things when I want to track them. One of my many git aliases[1] is 'git sn' for showing status without untracked files; this helps when dealing with my homedir:
I wondered about this, but I pose this question to you: what happens if you have a merge problem with, say, a libreoffice doc or something. How do you handle that? I use hg, but I imagine my plight would be similar. TIA.