Over the last several month most Android Phones have been rooted (Unlocked). Most within days of release are cracked and rooted. This allows for developers to get their hands on the latest blocks placed by wireless companies. They use this information to create ROMs and unlock procedures. If a user want to manually install Android they can download these files and do it themselves.
You will need a file manger which most are suggesting "Astro" which you can get from the Android Market.
Your impatient and want to download and install the newest Android Froyo or Gingerbread. Thanks to the Android community the updates can be done manually. Some users are downloading the file to there Mac or PC then renaming it and then installing it. Others are doing everything right from a Android device.
The folks over at AllDroid have posted the files and instruction for Eclair 2.1 Update All Droid is where the Droid has been cracked first. They have succesfully rooted the phone on XDA Developers. Meaning that users can now modify and improve the functions of there own devices. These are older example that explain how its done.
There is a thread on doing the manual install different ways on Android Central. Some people say the manual update went well and others are reporting errors. If you have any doubts in your own ability we recommend waiting for the update to be delivered to your Android Phone.
Most Android Phones have been rooted and ROMs built for them. The advantages to rooting a phone are numorus. As the communnity grows more places are offering storage of software and downloads. This has provided places for users to download the latest version of Android. XDA Forums is probably the most well known site for phone developers and ROM builders.