RawIOBase.readall() does the sensible thing already.  Maybe FileIO should be allowed to inherit it.

The alternative patch (which probably only works for raw unbuffered case)

diff -r ca54c27a9045 Lib/subprocess.py
--- a/Lib/subprocess.py Tue Aug 21 14:54:22 2012 +0100
+++ b/Lib/subprocess.py Wed Aug 22 00:39:32 2012 +0100
@@ -1152,7 +1152,7 @@


         def _readerthread(self, fh, buffer):
-            buffer.append(fh.read())
+            buffer.append(io.RawIOBase.readall(fh))
             fh.close()

produces

amount = 1 MB; time taken = 0.01 secs; rate = 71.42 MB/s
amount = 2 MB; time taken = 0.02 secs; rate = 83.33 MB/s
amount = 4 MB; time taken = 0.04 secs; rate = 105.26 MB/s
amount = 8 MB; time taken = 0.06 secs; rate = 135.59 MB/s
amount = 16 MB; time taken = 0.09 secs; rate = 170.20 MB/s
amount = 32 MB; time taken = 0.17 secs; rate = 190.46 MB/s
amount = 64 MB; time taken = 0.32 secs; rate = 202.52 MB/s
amount = 128 MB; time taken = 0.61 secs; rate = 211.56 MB/s