Yes, this solves my problems. I feel stupid. :)
I take that back.
I have two major continued problems even when I do, "export PYTHONPATH=build/lib:build/platlib".
1) When developing in the top-level directory of a distribution, the current directory still comes first in sys.path, so python still thinks the package source directory (with its __init__.py) is where the package lives.
2) Even when executing an example script in a sub-directory, python gets the idea that the package is in build/lib and doesn't find it's extension submodules. If I copy those over to the build/lib subdirectory they are found.
I see the PyXML distribution does not pretty things to control where the extension modules are built, probably for these reasons. Does everyone who has extension modules in their packages have to do that?
A final note, even if these problems didn't exist, I'd really prefer not to have to do "python setup.py build" before I test any change to a .py file. I don't want the `compile' back in the edit/compile/debug cycle for .py files.
If I think of good strategies for dealing with these problems, I'll post them. In the meantime, it's back to Makefiles for me. :)