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This program:
import subprocess, sys
p = subprocess.Popen(['bash', '-c', 'while true; do echo x; sleep 1; done'], bufsize=0, stdout=subprocess.PIPE)
for line in p.stdout:
 sys.stdout.buffer.write(line)
 sys.stdout.flush()
sits around and does nothing on Python 2.7.3. It works (i.e. prints 'x' once per second) on Python 3.
This was http://bugs.python.org/issue3907 and is supposedly fixed, but it's not.

Notice in the reply to Issue3907, "with 2.6, you have to use io.open() explicitly". This is still true in Python 2.7, i.e. the new 3.x-compatible io library is not used by default in Python 2. If you want to use it with subprocess.Popen, one way is to supply a pipe with an io wrapper, perhaps something like:
import io, os
i, o = os.pipe()
piperead = io.open(i,'rb',buffering=0)
p = subprocess.Popen(..., stdout=o)
See Chapter 15 of the Python 2.7 Standard Library doc for more information on the io module: http://docs.python.org/library/io.html