My intuition is that we want Python to be "complete". Many other languages can find the permutations of a multiset. Python has a permutations function. Many people on stackoverflow expected that function to be able to find those permutations.
One suggestion: Why not make it so that itertools.permutations checks if its argument is an instance of collections.Mapping? If it is, we could interpret the items as a mapping from elements to positive integers, which is a compact representation of a multiset. Then, it could do the right thing for that case.
Best,
Neil