Baker 2012 (Journal of Applied Ecology) used similar model. I was asking him and he replied he uses normal glm()
! He inspired me to use the following transformation (that he actually used in the linked article) - just recursively substitute the $\mbox{log} (\mu_{i,j})$, until you get this:
$$\begin{eqnarray} \mbox{log} ( \mu_{i,j+1} ) &=& \alpha_i + \sum\limits_{t=1}^{j} R_{t} + \sum\limits_{k} \alpha_k \sum\limits_{t=1}^{j}x_{k,t} \\ \mbox{log} ( \mu_{i,1} ) &=& \alpha_i \end{eqnarray}$$$$\mbox{log} ( \mu_{i,j+1} ) = \mbox{log} ( \mu_{i,1} ) + \sum\limits_{t=1}^{j} R_{t} + \sum\limits_{k} \alpha_k \sum\limits_{t=1}^{j}x_{k,t}$$
so actually and then, $\mbox{log}(\mu_{i,1})$ actscan be simply taken as a site-specific intercept:
$$\begin{eqnarray} \mbox{log} ( \mu_{i,j+1} ) &=& \alpha_i + \sum\limits_{t=1}^{j} R_{t} + \sum\limits_{k} \alpha_k \sum\limits_{t=1}^{j}x_{k,t} \\ \mbox{log} ( \mu_{i,1} ) &=& \alpha_i \end{eqnarray}$$
so this can be easily solved by classic GLM. It is trivial to see that the transformed equations are equivalent to the original model. I do not trivially see that the whole fit proccess including poisson errors will also be equivalent, but this is probably more limitation of my brain than an actual problem :).
The transformed model is of course very easily fitted using glm()
! Including overdispersion using the quasipoisson family.