Why does PIP convert underscores to dashes

I am trying to install a Pyramid app -- let's say test_app. inside a virtual environment and it is getting installed as test-app (pip freeze output shows it test-app==0.0).

Because of this, I can not import the package.

How should I fix this problem?

More info: http://mail.python.org/pipermail/distutils-sig/2011-August/017935.html

I am using pip version 1.3.1

setup.py:

import os

from setuptools import setup, find_packages

here = os.path.abspath(os.path.dirname(__file__))
README = open(os.path.join(here, 'README.txt')).read()
CHANGES = open(os.path.join(here, 'CHANGES.txt')).read()

requires = [
    'pyramid',
    'pyramid_debugtoolbar',
    'waitress',
    ]

setup(name='test_app',
      version='0.0',
      description='test_app',
      long_description=README + '\n\n' + CHANGES,
      classifiers=[
        "Programming Language :: Python",
        "Framework :: Pyramid",
        "Topic :: Internet :: WWW/HTTP",
        "Topic :: Internet :: WWW/HTTP :: WSGI :: Application",
        ],
      author='',
      author_email='',
      url='',
      keywords='web pyramid pylons',
      packages=find_packages(),
      include_package_data=True,
      zip_safe=False,
      install_requires=requires,
      tests_require=requires,
      test_suite="test_app",
      entry_points="""\
      [paste.app_factory]
      main = test_app:main
      """,
      )

UPDATE:

to summarize the findings so far:

• It is normal that pip reports the package name as test-app.
• It is not normal that the egg link is pointing to your virtual env root.
• But the fact that the .egg-info file is created inside your virtual env root as well points to develop using that directory as