The fact that there is no good, canonical guide for doing this in Python is one of the reasons I moved away from it and toward Ruby. With Ruby I had no problems writing and forking gems using the canonical guide (http://guides.rubygems.org/make-your-own-gem/). With Python, navigating the hell that is packaging is just demoralizing when it comes time to give end users a complicated chunk of code. (Setuptools is truly "a hack on a top of a bad design", not my own words.) I hope for Python's own sake that distribute (http://packages.python.org/distribute/) catches on and people are simply shamed out of using older tools, but since Python already has a problem with getting everyone to migrate code away from old things, I'm not holding my breath.

I'm still not sure how to do certain things "right", e.g., distribute a modified version of somebody else's package with my own package. In Ruby, I can do this with bundler specifying a git repo for my own fork of the gem (and then submit a pull request for the original fork, if it's a patch that's useful upstream).