Until recently, Bitbucket nicely rendered reStructuredText (reST) formatted README.txt files for Python projects. This made totally sense, because PyPI requires the project’s description in reST and most people put it into README.txt files.
However, for some reason the Bitbucket guys removed that feature and it seems that they don’t intend to bring it back. Instead, you are urged to rename your files from *.txt to *.rst.
Maybe some feedback would help to bring that feature back …
Update: Bitbucket fixed that issue. :-)