Using Py2.5.1, the problem seems to have gone away.
Lukas, can you please verify that it is solved and then close.


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rhettinger@localhost ~ $ py25/python -m trace --trace --count test.py
 --- modulename: threading, funcname: settrace
threading.py(70):     _trace_hook = func
 --- modulename: trace, funcname: <module>
<string>(1):   --- modulename: trace, funcname: <module>
test.py(1): def myiter():
test.py(6): for i in myiter():
 --- modulename: trace, funcname: myiter
test.py(2):     for i in range(10):
test.py(3):         yield i
test.py(7):     break
 --- modulename: trace, funcname: myiter
test.py(9): print 'foo'
foo