Where do I hack to make menu expand on mouseover instead of on click?

In the JS file, search for the places where click(function()) is called, and replace "click" with "hover".

Er - almost...
The jQuery click function takes a single argument (the function to execute when clicked), while the hover function takes two (the function to execute when hovering, and the function to execute when you move off the element).

I tried simply changing the .click to a .hover, and it worked great for my first expanding menu item, but the second wouldn't expand.

Try adding a second empty function argument to the click command - change

$(li).find('a:first').click(function(e) {
  Drupal.dhtmlMenu.toggleMenu($(li));
  return false;
});

to

$(li).find('a:first').hover(
  function(e) {
    Drupal.dhtmlMenu.toggleMenu($(li));
    return false;
  },
  function() {}
);

Thanks Mark B, it worked!

I coded some thing similar. I will keep this request closed but I will add my version... perhaps somebody find this helpful.

It adds a small delay.

Look up:

if (effects.doubleclick) {
$(li).find('a:first').dblclick(function(e) {
window.location = this.href;
});
}

$(li).find('a:first').click(function(e) {
Drupal.dhtmlMenu.toggleMenu($(li));
return false;
});

And change it to:

$(li).find('a:first').click(function(e) {
window.location = this.href;
});

$(li).find('a:first').hover(
function() {
mili=$(li);
contaJ=setTimeout(function(){
Drupal.dhtmlMenu.toggleMenu($(li));
},"500");
return false;
},
function() {
clearTimeout(contaJ);
return false;
});

Thanks Holoduke. Worked for me like a charm.