This refers to http://bugs.python.org/setuptools/issue64.
The issue has been fixed using the most simplistic changeset possible.
None of the improvements in the original issue have yet been applied.
There's still a whole lot of a good patch waiting on the original issue. I'm planning to apply that after we have made the 0.6 release. This serves me as a reminder to do so.
I am pushing this for 0.6.5
Would be really nice to get this in and 'prove' Distribute is trying to cleanup setuptools legacy issues.
The 1.6 support was fixed by adding its support, but Hanno wants to make it more generic, so it doesn't break on 1.7. I'll make the issue title more accurate.