Note that:

This bug now is tracked in Fedora as
https://bugzilla.redhat.com/show_bug.cgi?id=236535

The root of the problem on Fedora is that SElinux will give noisy
warnings if python tries to to access or create non-existing foo.pyo for
a packaged foo.py. Fedoras solution to this is to always create and
package .pyo files to which proper SElinux labels can be attached. The
.pyo files are automatically created by
/usr/lib/rpm/brp-python-bytecompile behind the scenes when a rpm is
build. The problem is that bdist_rpm only knows and lists the .pyo files
created by setup and thus doesn't include the brp-python-bytecompile .pyos.

It could be argued that Fedora thus enforces a custom policy on RPM, and
it should be Fedoras job to complete that job and patch bdist_rpm to
match that custom policy. See the pending patch at 
https://bugzilla.redhat.com/show_bug.cgi?id=236535#c20

However, it would be nice if Python distutils acknowledged that
downstream Fedora has a special need here and helped solving it. Perhaps
the patch could be accepted in distutils so that bdist_rpm always runs
setup with -O1? Or some other change that could make it easy to
configure/customize distutils to match the platforms needs ...

Finally, note that Fedora and Red Hat (and apparently also Suse and
Mandriva) uses rpm.org, and rpm5 is a competing fork. (Rpm5 probably
claims that rpm.org is the evil guys who forked.)

Tarek, I assume you meant you are creating a Fedora 10 or RHEL/CentOS 5 VM?

I will be glad to help testing and answering further questions.