I'll go ahead and document the procedure here. I'm not the first to do so, but here goes anyway:
Lots of folks have put tutorials online about how to upgrade the memory. Upgrading the CPU starts with getting to the point where you would if you were upgrading the RAM.
The next step is to take a small flathead screwdriver and unscrew the metal riser in the front left corner of the board. Then disconnect the small wire connector for the power switch (back right corner) and the one for the IR receiver (front right corner). With that done, the board can tip up at the front and slide out.
Removing the CPU heat sink is not easy. You need to push the spring clips down to raise the clip part off the board. Then pinch the clips together enough that they can go backwards through the hole. Release them like you would remove tire bolts — do the one diagonally opposite the first one second.
Once the heat sink is off, either scrape off the old thermal compound or clean it off with acetone. Be sure to get it all!
The socket unlocks easily with a flathead screwdriver. Give the screw half a turn only. The CPU will pop right out. Put the new one in, making sure to line up the index mark correctly (bottom right corner, as you look at the board as it would normally sit in the case).
Take careful note of the CPU heat sink. It goes on only in one direction. Get this wrong and you'll have to detach it again (remember what I said up there about it being hard to do?) because the mezanine board won't fit over it. Before installing the CPU heat sink, squirt a small amount of heat sink compound on top of the cpu. Apply the heat sink and then detach it again to check the coverage. Once the heat sink is down correctly, push the spring clips through the holes in the board, again making the second one diagonally opposite the first one.
Put the board back in the case, attach the metal riser to the bottom left corner screw hole, reattach the two wire connectors you removed before, then proceed as if you had just finished replacing the RAM.
My 2.0 GHz Merom was just over $300 on eBay, so this isn't an amazingly cheap upgrade. I did it because I wanted the performance of the core 2 Duo, but since this machine is an HTPC, I didn't need a built-in display (and a Mac Pro would have been way overkill)."