If I could "cvs up" I would submit a patch, but in the meantime, is there any good reason that distutils shouldn't write its output to stderr?
Win9X (command.com) users can't redirect stderr, and the DOS box there has a 50-line maximum output history. So stuff going to stderr is often lost forever. stdout can be redirected. I don't know whether disutils had that in mind, but it is "a reason" to leave it alone.
I'm using PyInline to execute a little bit of C code that returns some information about the system to the calling Python code. This code then sends some output to stdout.
If there's a connection between this and disutils, it's not apparent from what you wrote.