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Ah, I see; the traceback makes this much clearer. When you're uploading a file, everything in the form is sent as 
a MIME document in the body; every field is accompanied by 
a boundary separator and Content-Disposition header.
In multipart mode, cgi.py copies each field into a temporary file. 
The first idea I had was to only use tempfiles for the actual upload field; unfortunately, that doesn't help because the upload field isn't special, and cgi.py has no way to know which it is ahead of time.
Possible second approach: measure the size of the resulting file; if it's less than some threshold (1K? 10K?), read its contents into memory and close the tempfile. This means only the largest fields will require that a file descriptor be kept open. I'll explore this more after beta1.