A solution to this issue must deal with the following use case:

A developer has made changes to Modules/Setup and is tracking these changes in a VCS, for example with mercurial or with a git submodule through a symlink. By the time he is about to pull the commit that is fixing this issue from the Python repository, he is also experimenting with a new modification in Modules/Setup that he has not commited or staged yet in his own mercurial or git submodule repository or whatever.

IMO a solution to this issue that overwrites the current user changes when he is merging the corresponding commit is not acceptable.