Logged In: YES 
user_id=45365

I don't see this problem: both users see "sub1" as the working directory. Also 
on 10.4.3.

My guess: there is some problem with the readlink() call that Python uses to 
obtain the real pathname of the script (this is how it finds out sub2/
testpath.py is really sub1/testpath.py. Easy to test: fire up Python as user 2 
and do os.readlink("/Users/owner/TESTPATH/sub2").

I wouldn't be surprised if it is some sort of permission problem (maybe /
Users/owner being mode rwx--x--x so the readlink can't traverse through 
it?).