I think too many issues get mixed in this report. I would like to ignore
all but one issue, but I don't understand what the one issue is that
this report should deal with.

cartman, when you compare Python 2.4 and 2.5, could it be that the 2.4
Python was compiled --with-wctype-functions, and the 2.5 Python
--without-wctype-functions? That would surely explain the difference.

The Unicode lower/upper implementations are, by default, locale-inaware.
That is correct behavior, and by design. If you want locale-dependent
behavior, use 8-bit strings as Guido says.

ISTM that the original report was resolved - the tests don't support
--with-wctype-functions. This is because they assume that they know that 
LATIN CAPITAL LETTER A WITH DIAERESIS is a letter - which may not be the
case if the isletter test is locale-specific. If this is too be fixed,
the proper fix would be to just remove the test, which I advise against
- instead, the best behavior that Python should implement is the current
one, i.e. it is a good thing that the test fails
--with-wctype-functions. Perhaps a comment should be attached explaining
the potential breakage.