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readline() can return ''. This is handled in most places in httplib but not when a tunnel is used. It leads to a infinite loop that permanently blocks the program while wasting CPU cycles.
For the patch I simply copied the fix that is used elsewhere in the file where readline() is used. It can be fixed in the same way in 2.6.

In 3.2, http.client.py, insertion would be at line 718.
However, only one statement is needed to break. 3.2 elsewhere has
 if line in (b'\r\n', b'\n', b''):
 break
But I note that at 512, there is the code luzakiru patched in. I think that should perhaps be changed to above also, unless bare \n from reading a server is really impossible.
At 313, i found this misformed code:
 if not line:
 # Presumably, the server closed the connection before
 # sending a valid response.
 raise BadStatusLine(line)
[I am curious -- is it really intended to simply throw away the tunnel server response after the first header?]

Although perhaps not optimal, the patch is consistent with the rest of the code and fixes the reasonably severe issue. Could this patch be applied in lieu of a better one that can come later?

New changeset 790ae45b52be by Senthil Kumaran in branch '2.7':
Fix for Issue13684 - httplib tunnel infinite loop
http://hg.python.org/cpython/rev/790ae45b52be
New changeset 7787a9aebdc6 by Senthil Kumaran in branch '3.2':
3.2 - Fix for Issue13684 - httplib tunnel infinite loop
http://hg.python.org/cpython/rev/7787a9aebdc6
New changeset f98fb46ff273 by Senthil Kumaran in branch '2.7':
news for issue13684
http://hg.python.org/cpython/rev/f98fb46ff273
New changeset 26631c56d81f by Senthil Kumaran in branch '3.2':
news for issue13684
http://hg.python.org/cpython/rev/26631c56d81f
New changeset 1acb252a3858 by Senthil Kumaran in branch 'default':
3.2 - Fix for Issue13684 - httplib tunnel infinite loop
http://hg.python.org/cpython/rev/1acb252a3858
New changeset 246abd64e830 by Senthil Kumaran in branch 'default':
news for issue13684
http://hg.python.org/cpython/rev/246abd64e830 

New changeset 685c1db976c4 by Senthil Kumaran in branch '2.7':
httplib test for early eof response. related to Issue13684
http://hg.python.org/cpython/rev/685c1db976c4
New changeset afabb0635b15 by Senthil Kumaran in branch '3.2':
httplib test for early eof response. related to Issue13684
http://hg.python.org/cpython/rev/afabb0635b15
New changeset cfff6a53f4a3 by Senthil Kumaran in branch 'default':
httplib test for early eof response. related to Issue13684
http://hg.python.org/cpython/rev/cfff6a53f4a3 

I added a simple test for the early eof condition. It is not specific under _tunnel. I find that Mocks yet to be written that cover the response from httplib ( the mocks in the tests -httplib,urllib2), have their own overridden read() method which may not cover this scenario). The early eof test may be helpful to some extent as general test case. I am closing this bug report as fix has been covered.