I notice you say "adopt" rather than "vendor" - effectively removing distutils from the stdlib?

It could work, but to really be able to move distutils forward we need some sort of side-by-side versioning, such that a package can declare which version of distutils is required, preferably without needing to download old versions on the fly when building. I'm sure it's possible but haven't got a complete vision yet.

Maybe it's as simple as having flags that setup scripts enable before they build?

import distutils
distutils.enable(distutils.flags.smart_quote_args)

That way we can actually change things without breaking old build scripts. Should be just as feasible if setuptools adopts distutils, but there'll probably be opposition from elsewhere along the lines of including "core" functionality in the stdlib.