Obviously I'm missing a little context, but it seems a little wrong for the same launcher to be doing this double-duty.  It seems we only want to use the launcher in this way as it already has some of the interesting code we need - but the vast majority of users aren't going to want to have it behave this way implicitly (ie, when they start what they consider the "launcher", they aren't going to expect this magic.  Conversely, when someone executes "foo", they are going to be expecting exactly 1 thing to happen and that isn't "do what py.exe with no args does")

So maybe this could be behind a #define, and have another .exe built from the same sources?  One exe sticks with the launcher semantics (ie, never looks for foo-script.py), and the other sticks with the wrapper semantics (ie, terminates with an error if foo-script.py can't be found)

All that said though, I'm not involved in the distutils discussions and acknowledge the general requirements as real, so do whatever you need to do :)