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I've been looking at code on the tutor mailing list for some time, and
for line in file.readlines(): ...
is a common idiom there. I suppose this is because the readlines() method is easily discoverable while the proper way (iterate over the file object directly) is not.
A note added to the readlines() documentation might help:
"""
You don't need the readlines() method to loop over the lines of a file.
for line in file: process(line)
consumes less memory and is often faster.
"""