The attached ZIP file contains "test.bat" which runs "test.py" with
Python 2.6 and Python 3.0.

Python 2.6 behaves as expected (see "py26.out"), since it returns
strings from both "mike.txt" and "mike.txt.gz". However, the same test
with Python 3.0 returns bytes from "mike.txt.gz", as shown in "py30.out":
Output: Hello from Mike.
Output: This is the second line.
Output: Why did the robot cross the road?
Output: b'Hello from Mike.'
Output: b'This is the second line.'
Output: b'Why did the robot cross the road?'

For reference, I tested this on Python versions:
Python 2.6.1 (r261:67517, Dec  4 2008, 16:51:00) [MSC v.1500 32 bit
(Intel)] on win32
Python 3.0.1 (r301:69561, Feb 13 2009, 20:04:18) [MSC v.1500 32 bit
(Intel)] on win32

gzip.open() only implements the "rb" mode, and returns bytes.
fileinput could certainly wrap it with a io.TextIOWrapper.

Then the encoding issue arises.
fileinput.FileInput should grow an "encoding" parameter instead of always relying on the default encoding.