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> Which python level signal handler will CTRL_BREAK_EVENT 
> trigger?
The CRT maps it to a non-standard signal, SIGBREAK (21). It's defined in the signal module.
> GenerateConsoleCtrlEvent has different limitations for 
> CTRL_BREAK_EVENT and CTRL_C_EVENT according to MSDN; 
> I was referring to the CTRL_C_EVENT limitations. 
When creating a process group, the ConsoleFlags value in the process parameters is set to ignore CTRL_C_EVENT. You'll still get a DBG_CONTROL_C exception if a debugger is attached, but otherwise kernel32!CtrlRoutine ignores Ctrl+C. As you say, the docs state that "[CTRL_C_EVENT] cannot be generated for process groups". But it *does* work if you remove the ignore flag. This flag gets set/unset by assigning/removing a NULL handler.
Here's a revised example to enable Ctrl+C in the child, disable Python's INT handler, and then generate CTRL_C_EVENT to kill the child and verify that the exit code is STATUS_CONTROL_C_EXIT.
 import os
 import sys
 import signal
 import subprocess
 import threading
 STATUS_CONTROL_C_EXIT = 0xC000013A
 p = subprocess.Popen([sys.executable, '-i', '-c',
 'import ctypes, signal;'
 'kernel32 = ctypes.windll.kernel32;'
 'kernel32.SetConsoleCtrlHandler(None, 0);'
 'signal.signal(signal.SIGINT, signal.SIG_DFL)'],
 stdin=subprocess.PIPE,
 stdout=subprocess.PIPE,
 stderr=subprocess.PIPE,
 creationflags=subprocess.CREATE_NEW_PROCESS_GROUP)
 p.stderr.read(1) # poor man's WaitForInputIdle
 os.kill(p.pid, signal.CTRL_C_EVENT)
 watchdog = threading.Timer(5, p.terminate)
 watchdog.start()
 exitcode = p.wait()
 watchdog.cancel()
 if exitcode < 0:
 exitcode += 2 ** 32
 assert exitcode == STATUS_CONTROL_C_EXIT