Logged In: YES 
user_id=21627

I believe the current behaviour is there ever since revision
1.6, when the vars parameter was first introduced. The
commit message says

date: 1999/01/26 19:29:25;  author: guido;  state: Exp; 
lines: +17 -6
Patch by Chris Petrilli (not really tested since I don't
know this
module myself) to accept an option keyword argument (vars)
that is
substituted on top of the defaults that were setup in
__init__.  The
patch also fixes the problem where you can't have recusive
references
inside your configuration file.

We might want to ask Petrilli what the intention of this
feature was, or just proceed with changing the documentation
(and docstrings); contributions in that direction are
welcome. I agree with  anadelonbrin that the proposed change
is probably not adequate.