Here's what I did for Struts 2.0.x + the SmartURLs plugin. I'm planning to migrate to Struts 2.1.x + Convention plugin plugin later today. (SmartURLs was a third party plugin, that became the base for the Convention plugin, so I expect them to be similar, but not exactly the same.)
IIRC, the struts.action.extension can not be set to the empty string in 2.0.x without the SmartURLs filter replacement shown below in the web.xml. The action.packages just tells SmartURLs where to look for actions that aren't configured in struts.xml and the default.parent.package parameter assigns all discovered, non-overridden actions an xwork-package (ie not a java package).
I haven't been able to look for the updated documentation yet, but I would assume poking around looking for information on the Convention plugin would be the right starting point.