Nope, this is not yet fixed.

$ ./python 
Python 3.1a1+ (py3k:70929, Mar 31 2009, 19:18:12) 
[GCC 4.3.2] on linux2
...
...
>>> f_bytes = urllib.request.urlopen("http://www.python.org")
>>> f_string = io.TextIOWrapper(f_bytes,"iso-8859-1")
>>> print(f_string.read())
Traceback (most recent call last):
  File "<stdin>", line 1, in <module>
IOError: not readable