Ooops, I kinda should've commented on this issue here in stead, rather than in issue5689, so I'll just copy-paste it here as well:

I'm the author of the pyliblzma module, and if desired, I'd be happy to help out adapting pyliblzma for inclusion with python.
Most of it's code is based on bz2module.c, so it shouldn't be very far away from being good 'nuff.
What I see as required is:
* clean out use of C99 types etc.
* clean up the LZMAOptions class (this is the biggest difference from the bz2 module, as the filter supports a wide range of various options, everything related such as parsing, api documentation etc. was placed in it's own class, I've yet to receive any feedback on this decission or find any remote equivalents out there to draw inspiration from;)
* While most of the liblzma API has been implemented, support for multiple/alternate filters still remains to be implemented. When done it will also cause some breakage with the current pyliblzma API.

I plan on doing these things sooner or later anyways, it's pretty much just a matter of motivation and priorities standing in the way, actual interest from others would certainly have a positive effect on this. ;)

For other alternatives to the LGPL liblzma, you really don't have any, keep in mind that LZMA is "merely" the algorithm, while xz (and LZMA_alone, used for '.lzma', now obsolete, but still supported) are the actual format you want support for. The LZMA SDK does not provide any compatibility for this.