This root hack for the Motorola Milestone is exactly the same hack originally found on the Droid, but with a different update.zip file. It basically exploits a bug in the updater program on the phone, which takes a signed ZIP file and uses it to update the firmware. The bug consists in that the updater doesn't properly check the ZIP file contents, so it can be altered.

See a tutorial for applying the root hack on Android version 2.1 here.

This method is working for rooting Milestone too.