> (Interestingly, it *does* search all of sys.path to resolve the dependencies
of anything it actually installs.)

Wait a minute, the problems that we've been having here are when we install
allmydata-tahoe, which depends upon Nevow and Twisted, and setuptools is not
satisfied by the distribution of Nevow or of Twisted which is present in the
sys.path but not in a "site" directory.  So why do you say that setuptools does
search the entire sys.path?  That doesn't seem to be what's happening here.