Subclasses of string can no longer be interned.  The semantics of
interning were not clear here -- a subclass could be mutable, for
example -- and had bugs.  Explicitly interning a subclass of string
via intern() will raise a TypeError.  Internal operations that attempt
to intern a string subclass will have no effect.

Added a few tests to test_builtin that includes the old buggy code and
verifies that calls like PyObject_SetAttr() don't fail.  Perhaps these
tests should have gone in test_string.
diff --git a/Lib/test/test_builtin.py b/Lib/test/test_builtin.py
index bc5afdc..8e3a925 100644
--- a/Lib/test/test_builtin.py
+++ b/Lib/test/test_builtin.py
@@ -608,6 +608,23 @@
         s2 = s.swapcase().swapcase()
         self.assert_(intern(s2) is s)
 
+        # Subclasses of string can't be interned, because they
+        # provide too much opportunity for insane things to happen.
+        # We don't want them in the interned dict and if they aren't
+        # actually interned, we don't want to create the appearance
+        # that they are by allowing intern() to succeeed.
+        class S(str):
+            def __hash__(self):
+                return 123
+
+        self.assertRaises(TypeError, intern, S("abc"))
+
+        # It's still safe to pass these strings to routines that
+        # call intern internally, e.g. PyObject_SetAttr().
+        s = S("abc")
+        setattr(s, s, s)
+        self.assertEqual(getattr(s, s), s)
+
     def test_iter(self):
         self.assertRaises(TypeError, iter)
         self.assertRaises(TypeError, iter, 42, 42)
diff --git a/Misc/NEWS b/Misc/NEWS
index 9f80274..7550076 100644
--- a/Misc/NEWS
+++ b/Misc/NEWS
@@ -12,6 +12,12 @@
 Core and builtins
 -----------------
 
+Subclasses of string can no longer be interned.  The semantics of
+interning were not clear here -- a subclass could be mutable, for
+example -- and had bugs.  Explicitly interning a subclass of string
+via intern() will raise a TypeError.  Internal operations that attempt
+to intern a string subclass will have no effect.
+
 Extension modules
 -----------------
 
diff --git a/Objects/stringobject.c b/Objects/stringobject.c
index 29562a9..f29929b 100644
--- a/Objects/stringobject.c
+++ b/Objects/stringobject.c
@@ -4313,6 +4313,10 @@
 	PyObject *t;
 	if (s == NULL || !PyString_Check(s))
 		Py_FatalError("PyString_InternInPlace: strings only please!");
+	/* If it's a string subclass, we don't really know what putting
+	   it in the interned dict might do. */
+	if (!PyString_CheckExact(s))
+		return;
 	if (PyString_CHECK_INTERNED(s))
 		return;
 	if (interned == NULL) {
@@ -4322,36 +4326,22 @@
 			return;
 		}
 	}
-	if ((t = PyDict_GetItem(interned, (PyObject *)s)) != NULL) {
+	t = PyDict_GetItem(interned, (PyObject *)s);
+	if (t) {
 		Py_INCREF(t);
 		Py_DECREF(*p);
 		*p = t;
 		return;
 	}
-	/* Ensure that only true string objects appear in the intern dict */
-	if (!PyString_CheckExact(s)) {
-		t = PyString_FromStringAndSize(PyString_AS_STRING(s),
-						PyString_GET_SIZE(s));
-		if (t == NULL) {
-			PyErr_Clear();
-			return;
-		}
-	} else {
-		t = (PyObject*) s;
-		Py_INCREF(t);
-	}
 
-	if (PyDict_SetItem(interned, t, t) == 0) {
-		/* The two references in interned are not counted by
-		refcnt.  The string deallocator will take care of this */
-		((PyObject *)t)->ob_refcnt-=2;
-		PyString_CHECK_INTERNED(t) = SSTATE_INTERNED_MORTAL;
-		Py_DECREF(*p);
-		*p = t;
+	if (PyDict_SetItem(interned, s, s) < 0) {
+		PyErr_Clear();
 		return;
 	}
-	Py_DECREF(t);
-	PyErr_Clear();
+	/* The two references in interned are not counted by refcnt.
+	   The string deallocator will take care of this */
+	(*p)->ob_refcnt -= 2;
+	PyString_CHECK_INTERNED(s) = SSTATE_INTERNED_MORTAL;
 }
 
 void
diff --git a/Python/bltinmodule.c b/Python/bltinmodule.c
index 8ff733c..04fcf59 100644
--- a/Python/bltinmodule.c
+++ b/Python/bltinmodule.c
@@ -1035,6 +1035,11 @@
 	PyObject *s;
 	if (!PyArg_ParseTuple(args, "S:intern", &s))
 		return NULL;
+	if (!PyString_CheckExact(s)) {
+		PyErr_SetString(PyExc_TypeError,
+				"can't intern subclass of string");
+		return NULL;
+	}
 	Py_INCREF(s);
 	PyString_InternInPlace(&s);
 	return s;