When comparing two files which should be equal the last line is
different:

The first file is a bzip2 compressed file and is read with
bz2.BZ2File()
The second file is the same file uncompressed and read with open()

The first file named file.txt.bz2 is uncompressed with:

$ bunzip2 -k file.txt.bz2

To compare I use this script:
###############################
import bz2

f1 = bz2.BZ2File(r'file.txt.bz2', 'r')
f2 = open(r'file.txt', 'r')
lines = 0
while True:
   line1 = f1.readline()
   line2 = f2.readline()
   if line1 == '':
      break
   lines += 1
   if line1 != line2:
      print 'line number:', lines
      print repr(line1)
      print repr(line2)
f1.close()
f2.close()
##############################

Output:

$ python bzp.py
line number: 588317
'\x07'
'' 

The offending attached file is 5.5 MB. Sorry, i could not reproduce this problem
with a smaller file.

Tested in Fedora Core 5 and Python 2.4.3