I am attaching the patch io.diff that does the following:

- If a chunk ends in "\r", read the next chunk to check if it starts
with "\n". This is obviously a very simplified solution that can be
optimized.

- invoke _replacenl on the complete string read instead of what is being
returned in each read call.

I also incorporated the test case by Amaury and added one more.

With this patch in place, the following tests failed (on SuSE 10.1):

test_doctest test_mailbox test_nis test_old_mailbox
test_pickletools test_pty test_sys

The failures (other than known test_mailbox and test_old_mailbox) didn't
look like they are caused by this fix.