I think one bug here is that codecs readers use str.splitlines() internally.  The splitlines method treats a bunch of different characters as line separators, unlike io.<file>.readlines().  So, you end up with different behavior between doing iter(codecs.getreader(...)) and iter(io.open(...)).

We can argue if str.splitlines() is doing the correct thing, see the table here:
https://docs.python.org/3.8/library/stdtypes.html#str.splitlines

However, it seems clearer to me that readlines() on a codecs reader and on a file object should really be splitting lines on the same characters.