OK, after getting tired of manually setting this using Sharepoint Manager 2007, I decided to put together a solution. This solution provides a nice drop-down on the Document Library 'Security' menu like this:
And when you click on the 'Read/Write Security' link, you'll see this:
It looks and acts just like the page for standard lists - but this one also works for document libraries.
Download the solution from codeplex at http://moresharepoint.codeplex.com