diff --git a/.hgsigs b/.hgsigs
--- a/.hgsigs
+++ b/.hgsigs
@@ -1,1 +1,2 @@
 9b3e9e242f5c97cc0c7657e5ac93dce7de61ca16 0 iQEcBAABAgAGBQJWDuAdAAoJEJ1bI/kYT6UUAlYH/ReCa7Im5tvy+ot5oAc7xey/O2rCVHp2h6i82tTWK/0i9EaS4DP+eTbAjV4WJA4qWF5DPenEJ3X9JhrTLNvGkR0f7lUqiFVMTJ472YlSsvIWg38gVFruzwk1cODRfq72o8ERYcRSfzrL4cDpIqjEd/vVVCV/gKVvPmzr4/FED/ZmS0X6T9gxWJo/eWSuLNAxHHtE/pCWDO3XEe+iOm+hHjkyz4Hn2r9/+ucrirnzycH6DnYO/kWvQzBnzgMjJm+1rLZ5cfU89V8zfhv6z0pd8CHZfpKGc2Z8EwVJq9LR+M4/76uDlYXx7IfZAxhRNqN6MC+yvPmDo3382dNr7Wkopi0=
+9bf8eb837e785b6856ccfac264e977ce3ebe1535 0 iQEcBAABAgAGBQJW5XaVAAoJEJ1bI/kYT6UUbeMH/AsGg21jTc0tTT+228T+WfrfkbxrPkkULQF/Eo3ChlrhnFZ5B1y7ellSx6XGas7yKpqHHtNmrVwY3KBfUaYEljML/osEt1kvM6JGcd0vDbAW1uA2sdJR2AXmf32MjguFVhmYi9Lj79WYtgg241YGPe4dH0ompNFVqazNxCfmDBZijzSkF57FURMpV2e6+MyNq0txSo9Q82eALy0GAIX7NKQcxtynxG9ETzVzuVpeNE9MEZh0ObbUtPGezd55GXXcVqI8ZEurZwf6KHnd5M+5wxIZf84gM/k4QgQbRiIxNj4QfVmTZlVNSkC7PwSbF8twZPjlAprwldYvMi/c7ZVocEY=
diff --git a/.hgtags b/.hgtags
--- a/.hgtags
+++ b/.hgtags
@@ -62,3 +62,5 @@ ad0ce803b40cb17fc3988373052943e041030b02
 c6e32714336345403adf76abb6ebf9b8116fcdc7 0.2.1
 14f488a5dc4ca6647bc6acf12534fd137e968aa8 0.2.2
 9b3e9e242f5c97cc0c7657e5ac93dce7de61ca16 0.3
+250f8150c4bb0ca00dcb92f49ce9a475545863e8 0.3.1
+9bf8eb837e785b6856ccfac264e977ce3ebe1535 0.3.1
diff --git a/docs/contributing.rst b/docs/contributing.rst
--- a/docs/contributing.rst
+++ b/docs/contributing.rst
@@ -35,7 +35,7 @@ To get started with development::
         virtualenv ../kallithea-venv
         source ../kallithea-venv/bin/activate
         pip install --upgrade pip setuptools
-        python2 setup.py develop
+        pip install -e .
         paster make-config Kallithea my.ini
         paster setup-db my.ini --user=user --email=user@example.com --password=password --repos=/tmp
         paster serve my.ini --reload &
diff --git a/docs/installation.rst b/docs/installation.rst
--- a/docs/installation.rst
+++ b/docs/installation.rst
@@ -40,7 +40,7 @@ repository, follow the instructions belo
         virtualenv ../kallithea-venv
         source ../kallithea-venv/bin/activate
         pip install --upgrade pip setuptools
-        python2 setup.py develop
+        pip install -e .
         python2 setup.py compile_catalog   # for translation of the UI
 
 You can now proceed to :ref:`setup`.
@@ -96,7 +96,7 @@ An additional benefit of virtualenv_ is 
   Alternatively, download a .tar.gz from http://pypi.python.org/pypi/Kallithea,
   extract it and run::
 
-    python2 setup.py install
+    pip install .
 
 - This will install Kallithea together with pylons_ and all other required
   python libraries into the activated virtualenv.
diff --git a/docs/overview.rst b/docs/overview.rst
--- a/docs/overview.rst
+++ b/docs/overview.rst
@@ -53,7 +53,7 @@ installed.
   updating it is that you take advantage of the most recent improvements. Using
   it directly from a DVCS also means that it is easy to track local customizations.
 
-  Running ``setup.py develop`` in the source will use pip to install the
+  Running ``pip install -e .`` in the source will use pip to install the
   necessary dependencies in the Python environment and create a
   ``.../site-packages/Kallithea.egg-link`` file there that points at the Kallithea
   source.
diff --git a/kallithea/__init__.py b/kallithea/__init__.py
--- a/kallithea/__init__.py
+++ b/kallithea/__init__.py
@@ -29,7 +29,7 @@ Original author and date, and relevant c
 import sys
 import platform
 
-VERSION = (0, 3)
+VERSION = (0, 3, 99)
 BACKENDS = {
     'hg': 'Mercurial repository',
     'git': 'Git repository',
diff --git a/kallithea/lib/auth_modules/auth_pam.py b/kallithea/lib/auth_modules/auth_pam.py
--- a/kallithea/lib/auth_modules/auth_pam.py
+++ b/kallithea/lib/auth_modules/auth_pam.py
@@ -25,7 +25,14 @@ Original author and date, and relevant c
 
 import logging
 import time
-import pam
+
+try:
+    from pam import authenticate as pam_authenticate
+except ImportError:
+    # work around pam.authenticate missing in python-pam 1.8.*
+    from pam import pam
+    pam_authenticate = pam().authenticate
+
 import pwd
 import grp
 import re
@@ -92,7 +99,7 @@ class KallitheaAuthPlugin(auth_modules.K
             # Need lock here, as PAM authentication is not thread safe
             _pam_lock.acquire()
             try:
-                auth_result = pam.authenticate(username, password,
+                auth_result = pam_authenticate(username, password,
                                                settings["service"])
                 # cache result only if we properly authenticated
                 if auth_result:
diff --git a/requirements.txt b/requirements.txt
new file mode 100644
--- /dev/null
+++ b/requirements.txt
@@ -0,0 +1,4 @@
+# requirements.txt file for use as "pip install -r requirements.txt" as a
+# readthedocs compatible alternative to "pip install -e ." which is a working
+# alternative to "setup.py develop" which doesn't work with Mercurial 3.7
+.