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My original report looks like a misdiagnosis. What appears to be happening is that "pysetup3.3 install" is case *insensitive* (thus allowing "pysetup3.3 install distutils2", but "pysetup3.3 remove" is case *sensitive*, thus requiring "pysetup3.3 remove Distutils2".
I figured this out because installing things with pysetup3.3 after running "make altinstall" actually broke test_packaging in my trunk build - apparently due to tests complaining that the package cache wasn't empty. Should I create a new issue pointing out that problem? Perhaps sysconfig should have a "checkout" profile that keeps everything away from system directories.
Anyway, after seeing Distutils2 in that test failure report, I thought to run "pysetup3.3 list" and confirmed the different capitalisation. Sure enough, upper-casing the initial D let the remove command work.