To me it looks like a horrible corner case. Especially as the original bug report wasn't even for a distutils-style script, but for a package (coverage.py) that only uses a setuptools console_script entrypoint. How that __pycache__ dir ends up in there baffles me.

But if I get a bug report like this a few days after the functionality first is added, it is probable that we'll see it more often :-)