U+0085 corresponds to a line terminator (*). and codecs.open() observes this convention.
Do note that the new io.open() (or the built-in open() in 3.x) only recognizes '\r' and '\n' as line separators.

In any case, changing this behaviour would break compatibility, therefore I'm rejecting the issue.

(*) http://en.wikipedia.org/wiki/Newline#Unicode