Yes, this is the way it works.  There is no copy of the lines kept in memory, the only lines that can be displayed in the traceback are the ones currently on disk.

Although your speaking about a "script" is a bit confusing: if you are running a script from the command line, then the update to the source file should be noticed and the code reinterpreted.  I'm guessing you aren't running a standalone script, but are running and editing something out of an interpreter session that doesn't restart.  If this is correct then my statement above applies.  If not, you can give more details, but I doubt that there is a real python bug here so I'm closing the issue.  It can always be reopened if it turns out I'm wrong.