Hit submit too soon; sorry...

But it would be reasonable to aim for correctly rounded results when the 
second argument to round is not too large (less than 22 in absolute 
value, for example), so that 10**abs(n) is exactly representable as a 
double.  I think this should be easy when n is negative (use fmod to 
compute the remainder, and subtract the remainder from the original 
number to round down, or add (10**-n - remainder) to round up, and a 
little bit more involved when n is positive.

Note that the 3.x version will need to be slightly different, so that it 
does round-half-to-even instead of round-half-away-from-zero.

I think that while these changes could be considered bugfixes they're 
not essential, so should be put off until 2.7/3.1.