Commenting out the ZMP invitation on a new session allows MudMagic to log into the server. I'm not sure if this is just MudMagic's response to the ZMP packet or not, I haven't been able to get a different telnet client onto this SUSE install (Yes, I'm a linux newb =\) Below is the exception.

Running!
Connection from ('127.0.0.1', 55683)
Disconnecting ('127.0.0.1', 55683)
[ERROR] EXCEPTION:
Traceback (most recent call last):
File "/usr/lib/python2.5/asyncore.py", line 68, in read
obj.handle_read_event()
File "/usr/lib/python2.5/asyncore.py", line 390, in handle_read_event
self.handle_read()
File "/home/linux/Desktop/sourcemud-0.0.2/src/sourcemud/server.py", line 55, in handle_read
self.onRead(bytes)
File "/home/linux/Desktop/sourcemud-0.0.2/src/sourcemud/telnet.py", line 128, in onRead
self.sendZmp('zmp.ident', ['Source MUD'])
File "/home/linux/Desktop/sourcemud-0.0.2/src/sourcemud/telnet.py", line 210, in sendZmp
self.outBuffer.append(IAC)
AttributeError: 'str' object has no attribute 'append'

Forgot to mention that otherwise it works great.