The `BINARY_MODULO` operator hardcodes a test for `PyUnicode`:

        TARGET(BINARY_MODULO) {
            PyObject *divisor = POP();
            PyObject *dividend = TOP();
            PyObject *res = PyUnicode_CheckExact(dividend) ?
                PyUnicode_Format(dividend, divisor) :
                PyNumber_Remainder(dividend, divisor);

This means that a RHS subclass of str can't override the operator:

>>> class Foo(str):
...     def __rmod__(self, other):
...         return self % other
...
>>> "Bar: %s" % Foo("Foo: %s")
'Bar: Foo %s'

The expected output there is "Foo: Bar %s".

This works correctly for `bytes`:

>>> class FooBytes(bytes):
...     def __rmod__(self, other):
...         return self % other
...
>>> b"Bar: %s" % FooBytes(b"Foo: %s")
b'Foo: Bar: %s'

and for all other types where the RHS is a subclass.

Perhaps there should be a test to see if `divisor` is a subclass, and in that case take the slow path?

Here's a proposed patch for tip; what versions would it be worth backporting this to?

(Note, there's no NEWS update in this patch).

I'm not sure if issues are linked automatically yet. I put the patch up as a pull request on GitHub: https://github.com/python/cpython/pull/51

Is 2.7 free from this bug?

> Is 2.7 free from this bug?

No, 2.7 is affected too:

>>> class SubclassedStr(str):
...     def __rmod__(self, other):
...         return 'Success, self.__rmod__({!r}) was called'.format(other)
...
>>> 'lhs %% %r' % SubclassedStr('rhs')
"lhs % 'rhs'"

Expected output is "Success, self.__rmod__('lhs %% %r') was called"

On the plus side, unicode is not affected:

>>> class SubclassedUnicode(unicode):
...     def __rmod__(self, other):
...         return u'Success, self.__rmod__({!r}) was called'.format(other)
...
>>> u'lhs %% %r' % SubclassedUnicode(u'rhs')
u"Success, self.__rmod__(u'lhs %% %r') was called"

New changeset b4f0e980b6084e9a994e3f069269fac2471e0d78 by Xiang Zhang in branch '2.7':
bpo-28598: Support __rmod__ for RHS subclasses of str in % string formatting operations (GH-366)
https://github.com/python/cpython/commit/b4f0e980b6084e9a994e3f069269fac2471e0d78

New changeset bc144f0abff2b36595171377ee847c0266596ab2 by Berker Peksag (Martijn Pieters) in branch '3.5':
bpo-28598: Support __rmod__ for RHS subclasses of str in % string formatting operations (#94)
https://github.com/python/cpython/commit/bc144f0abff2b36595171377ee847c0266596ab2

New changeset 53039ad3814a8918c5311f37bd654428b9843fcc by Berker Peksag (Martijn Pieters) in branch '3.6':
bpo-28598: Support __rmod__ for RHS subclasses of str in % string formatting operations (#95)
https://github.com/python/cpython/commit/53039ad3814a8918c5311f37bd654428b9843fcc

New changeset d7e64337ef45085792b382a09f5b3a45d3687c8c by Serhiy Storchaka (Martijn Pieters) in branch 'master':
bpo-28598: Support __rmod__ for RHS subclasses of str in % string formatting operations (#51)
https://github.com/python/cpython/commit/d7e64337ef45085792b382a09f5b3a45d3687c8c