This is a general libvte issue. Try this:
#!/usr/bin/env python
import gtk
import vte
if __name__ == '__main__':
v = vte.Terminal()
v.connect(child-exited, lambda term: gtk.main_quit())
v.fork_command()
window = gtk.Window()
window.add(v)
Reassigning to update-manager.
** Package changed: ubuntu = update-manager (Ubuntu)
--
Applying changes window in Update Manager can be expanded but not shrunk
https://bugs.launchpad.net/bugs/635400
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