This document does explain in short how you install the popular FroyoMod onto your Motorola Milestone.
( Froyomod does use Android 2.2.2 )

• install RSD Lite v4.9

• download and unzip vulnerable_recovery_only_RAMDLD90_78.zip

• download androidiani-openrecovery ( http://code.google.com/p/androidiani-openrecovery/ ):
  unzip into root of your Android SD ( update.zip + OpenRecovery Folder )

• Download Bootimage for your Droid (http://forum.xda-developers.com/showthread.php?t=815595) und verschieben auf SD nach /sdcard/openrecovery/updates ( Zip nicht entpacken! )

• Shutdown Phone, Connect USB, HOLD D-PAD UP, Power on

• RSD Lite Flash Vulernable, Hold D-PAD UP on Reboot -> Boot to Boot Loader (OTHERWISE: OTA LOCK!)

• Shutdown, Hold Camera Button + Power Button (or X+PWR), Maintance Screen comes up. Press Speaker U+ Camera, choose with D-Pad apply sdcard:update.zip and click

• Backup: Recovery, Recovery All

• Wipe: Wipe Dalvik, Wipe Cache und Wipe Data/Factory Reset

• Flash: Apply Update

Thats it!
You don’t need to do full wipe all the time if you change within version.

If you need QWERTZ Hardware Keyboard: Within OpenRecovery: Settings > Keyboard Layout > qwertz