Hi!  Sorry it took me so long to look at this.  I just checked the  
source in current trunk, and the relevant code is the same so this  
patch is still useful.  (See the initial post for details.)

Here is an updated version of the patch which simply removes some  
dead code and updates a URL:

regards,

Zooko

diff -rN -u old-up/setuptools-0.6c7/ez_setup.py new-up/ 
setuptools-0.6c7/ez_setup.py
--- old-up/setuptools-0.6c7/ez_setup.py	2007-09-28 16:41:24.000000000  
-0600
+++ new-up/setuptools-0.6c7/ez_setup.py	2007-09-28 16:41:25.000000000  
-0600
@@ -1,4 +1,4 @@
-#!python
+#!/usr/bin/env python
"""Bootstrap setuptools installation
If you want to use setuptools in your package's setup.py, just  
include this
@@ -13,7 +13,7 @@
This file can also be run as a script to install or upgrade setuptools.
"""
-import sys
+import os, re, subprocess, sys
DEFAULT_VERSION = "0.6c7"
DEFAULT_URL     = "http://pypi.python.org/packages/%s/s/setuptools/"  
% sys.version[:3]
@@ -44,8 +44,6 @@
      'setuptools-0.6c6-py2.5.egg': 'b2f8a7520709a5b34f80946de5f02f53',
}
-import sys, os
-
def _validate_md5(egg_name, data):
      if egg_name in md5_data:
          from md5 import md5
@@ -58,6 +56,42 @@
              sys.exit(2)
      return data
+# The following code to parse versions is copied from  
pkg_resources.py so that
+# we can parse versions without importing that module.
+component_re = re.compile(r'(\d+ | [a-z]+ | \.| -)', re.VERBOSE)
+replace = {'pre':'c',  
'preview':'c','-':'final-','rc':'c','dev':'@'}.get
+
+def _parse_version_parts(s):
+    for part in component_re.split(s):
+        part = replace(part,part)
+        if not part or part=='.':
+            continue
+        if part[:1] in '0123456789':
+            yield part.zfill(8)    # pad for numeric comparison
+        else:
+            yield '*'+part
+
+    yield '*final'  # ensure that alpha/beta/candidate are before final
+
+def parse_version(s):
+    parts = []
+    for part in _parse_version_parts(s.lower()):
+        if part.startswith('*'):
+            if part<'*final':   # remove '-' before a prerelease tag
+                while parts and parts[-1]=='*final-': parts.pop()
+            # remove trailing zeros from each series of numeric parts
+            while parts and parts[-1]=='00000000':
+                parts.pop()
+        parts.append(part)
+    return tuple(parts)
+
+def setuptools_is_new_enough(required_version):
+    """Return True if setuptools is already installed and has a version
+    number >= required_version."""
+    sub = subprocess.Popen([sys.executable, "-c", "import  
setuptools;print setuptools.__version__"], stdout=subprocess.PIPE)
+    verstr = sub.stdout.read().strip()
+    ver = parse_version(verstr)
+    return ver and ver >= parse_version(required_version)
def use_setuptools(
      version=DEFAULT_VERSION, download_base=DEFAULT_URL,  
to_dir=os.curdir,
@@ -74,32 +108,11 @@
      this routine will print a message to ``sys.stderr`` and raise  
SystemExit in
      an attempt to abort the calling script.
      """
-    try:
-        import setuptools
-        if setuptools.__version__ == '0.0.1':
-            print >>sys.stderr, (
-            "You have an obsolete version of setuptools installed.   
Please\n"
-            "remove it from your system entirely before rerunning  
this script."
-            )
-            sys.exit(2)
-    except ImportError:
+    if not setuptools_is_new_enough(version):
          egg = download_setuptools(version, download_base, to_dir,  
download_delay)
          sys.path.insert(0, egg)
          import setuptools; setuptools.bootstrap_install_from = egg
-    import pkg_resources
-    try:
-        pkg_resources.require("setuptools>="+version)
-
-    except pkg_resources.VersionConflict, e:
-        # XXX could we install in a subprocess here?
-        print >>sys.stderr, (
-            "The required version of setuptools (>=%s) is not  
available, and\n"
-            "can't be installed while this script is running. Please  
install\n"
-            " a more recent version first.\n\n(Currently using %r)"
-        ) % (version, e.args[0])
-        sys.exit(2)
-
def download_setuptools(
      version=DEFAULT_VERSION, download_base=DEFAULT_URL,  
to_dir=os.curdir,
      delay = 15
@@ -150,9 +163,14 @@
def main(argv, version=DEFAULT_VERSION):
      """Install or upgrade setuptools and EasyInstall"""
-    try:
-        import setuptools
-    except ImportError:
+    if setuptools_is_new_enough(version):
+        if argv:
+            from setuptools.command.easy_install import main
+            main(argv)
+        else:
+            print "Setuptools version",version,"or greater has been  
installed."
+            print '(Run "ez_setup.py -U setuptools" to reinstall or  
upgrade.)'
+    else:
          egg = None
          try:
              egg = download_setuptools(version, delay=0)
@@ -162,31 +180,6 @@
          finally:
              if egg and os.path.exists(egg):
                  os.unlink(egg)
-    else:
-        if setuptools.__version__ == '0.0.1':
-            # tell the user to uninstall obsolete version
-            use_setuptools(version)
-
-    req = "setuptools>="+version
-    import pkg_resources
-    try:
-        pkg_resources.require(req)
-    except pkg_resources.VersionConflict:
-        try:
-            from setuptools.command.easy_install import main
-        except ImportError:
-            from easy_install import main
-        main(list(argv)+[download_setuptools(delay=0)])
-        sys.exit(0) # try to force an exit
-    else:
-        if argv:
-            from setuptools.command.easy_install import main
-            main(argv)
-        else:
-            print "Setuptools version",version,"or greater has been  
installed."
-            print '(Run "ez_setup.py -U setuptools" to reinstall or  
upgrade.)'
-
-
def update_md5(filenames):
      """Update our built-in md5 registry"""