--- a/setup.py	Sat Oct 09 15:13:08 2010 -0500
+++ b/setup.py	Sat Oct 09 15:40:29 2010 -0500
@@ -301,7 +301,7 @@
             if '\0' in data:
                 continue
 
-            data = data.replace('@LIBDIR@', libdir)
+            data = data.replace('@LIBDIR@', libdir.encode('string_escape'))
             open(outfile, 'wb').write(data)
 
 cmdclass = {'build_mo': hgbuildmo,