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Yes, socat was compiled under cygwin. I'll have to investigate whether I want to go the route of cygwin separately or just just leave the script as a pure stdin/out filter (since neither I nor the users have the cygwin environment installed).
After reading what you said, I re-read the MS notes (http://www.microsoft.com/resources/documentation/windows/xp/all/proddocs/en-us/redirection.mspx?mfr=true) and finally noticed the 'specific to each tool' text next to the description for handles 3-9.
 
Just to be sure, I came up with this simple test:
 echo test 1>&3 | set /P TEST= 0<&3
Which basically squashes my misconception, as it doesn't work.
So, I believe now that what I wanted is beyond the capabilities of the common Windows command shell, and this can be closed/invalid as not being a Python issue. I also wish I was home using my Linux box about now. :)
Thank you all very much for taking the time to help educate me on this!