OMG… http://pythonhosted.org/distribute/setuptools.html says:

Note: projects listed in setup_requires will NOT be automatically installed on the system where the setup script is being run. They are simply downloaded to the setup directory if they’re not locally available already. If you want them to be installed, as well as being available when the setup script is run, you should add them to install_requires and setup_requires.

Here we go…