Two other points:
- The project you complain about is mine and hasn't been releasing very often recently (I must fix my crappy release scripts). Also, the use of setuptools by that project is new. So, I put my hands up and admit that the failure could easily be my fault, not setuptools'.
- If you get time, a bug report is welcome! (Send it to me -- if it's setuptools' fault, I'll forward the bug report along)