(1)  In the example code, why is parms backquoted?  My first thought was that it was for repr, which won't work in Py3, particularly since it isn't quoted on the previous line.

+            parms = self.read_sb_data()
+            self.msg('IAC SB %d %s IAC SE', ord(opt), `parms`)

(2)  There are advantages to the old callback way.  It is easier to change things per-instance, at runtime, and even mid-connection.  It might be worth showing an example that restores the current model.

    option_callback=None # class default
    def set_option_negotiation_callback(self, callback):
        """Provide a callback function called after each receipt of a telnet option."""
        self.option_callback = callback

    def handle_option(self, command, option):
        if self.option_callback is not None:
            return self.option_callback(self, command, option)