diff --git a/doc/example/pythoncollection.txt b/doc/example/pythoncollection.txt
index 99b4f5d1e..a39cd169e 100644
--- a/doc/example/pythoncollection.txt
+++ b/doc/example/pythoncollection.txt
@@ -12,6 +12,18 @@ You can set the :confval:`norecursedirs` option in an ini-file, for example your
 
 This would tell py.test to not recurse into typical subversion or sphinx-build directories or into any ``tmp`` prefixed directory.
 
+always try to interpret arguments as Python packages
+-----------------------------------------------------
+
+You can use the ``--pyargs`` option to make py.test try
+interpreting arguments as python package names, deriving
+their file system path and then running the test. Through
+an ini-file and the :confval:`addopts` option you can make
+this change more permanently::
+
+    # content of setup.cfg or tox.ini
+    [pytest]
+    addopts = --pyargs
 
 finding out what is collected
 -----------------------------------------------
diff --git a/doc/usage.txt b/doc/usage.txt
index 02607ee99..067a6f54b 100644
--- a/doc/usage.txt
+++ b/doc/usage.txt
@@ -36,7 +36,7 @@ Several test run options::
 
 Import 'pkg' and use its filesystem location to find and run tests::
 
-    py.test --testpkg=pypkg # run all tests found below directory of pypkg
+    py.test --pyargs pkg # run all tests found below directory of pypkg
 
 calling pytest through ``python -m pytest``
 -----------------------------------------------------
diff --git a/pytest/plugin/session.py b/pytest/plugin/session.py
index e54fbc1d8..a7c3a4724 100644
--- a/pytest/plugin/session.py
+++ b/pytest/plugin/session.py
@@ -366,9 +366,10 @@ class Collection(FSCollector):
         self.trace.root.indent += 1
         self._notfound = []
         self._initialpaths = set()
-        self._initialargs = args
+        self._initialparts = []
         for arg in args:
             parts = self._parsearg(arg)
+            self._initialparts.append(parts)
             self._initialpaths.add(parts[0])
         self.ihook.pytest_collectstart(collector=self)
         rep = self.ihook.pytest_make_collect_report(collector=self)
@@ -376,7 +377,7 @@ class Collection(FSCollector):
         self.trace.root.indent -= 1
         if self._notfound:
             for arg, exc in self._notfound:
-                line = "no name %r in any of %r" % (exc.args[1], exc.args[0])
+                line = "(no name %r in any of %r)" % (arg, exc.args[0])
                 raise pytest.UsageError("not found: %s\n%s" %(arg, line))
         if not genitems:
             return rep.result
@@ -388,8 +389,9 @@ class Collection(FSCollector):
             return items
 
     def collect(self):
-        for arg in self._initialargs:
-            self.trace("processing arg", arg)
+        for parts in self._initialparts:
+            arg = "::".join(map(str, parts))
+            self.trace("processing argument", arg)
             self.trace.root.indent += 1
             try:
                 for x in self._collect(arg):
@@ -417,8 +419,9 @@ class Collection(FSCollector):
 
     def _collectfile(self, path):
         ihook = self.gethookproxy(path)
-        if ihook.pytest_ignore_collect(path=path, config=self.config):
-           return ()
+        if not self.isinitpath(path):
+            if ihook.pytest_ignore_collect(path=path, config=self.config):
+               return ()
         return ihook.pytest_collect_file(path=path, parent=self)
 
     def _recurse(self, path):
@@ -439,6 +442,8 @@ class Collection(FSCollector):
         p = py.path.local(mod.__file__)
         if p.purebasename == "__init__":
             p = p.dirpath()
+        else:
+            p = p.new(basename=p.purebasename+".py")
         return p
 
     def _parsearg(self, arg):
diff --git a/testing/acceptance_test.py b/testing/acceptance_test.py
index 12afa28bd..d9dea4716 100644
--- a/testing/acceptance_test.py
+++ b/testing/acceptance_test.py
@@ -310,7 +310,8 @@ class TestInvocationVariants:
         out, err = capsys.readouterr()
         assert "--myopt" in out
 
-    def test_cmdline_python_package(self, testdir):
+    def test_cmdline_python_package(self, testdir, monkeypatch):
+        monkeypatch.delenv('PYTHONDONTWRITEBYTECODE')
         path = testdir.mkpydir("tpkg")
         path.join("test_hello.py").write("def test_hello(): pass")
         path.join("test_world.py").write("def test_world(): pass")
diff --git a/testing/plugin/test_assertion.py b/testing/plugin/test_assertion.py
index 59c36ca0b..d1a531a7c 100644
--- a/testing/plugin/test_assertion.py
+++ b/testing/plugin/test_assertion.py
@@ -161,15 +161,6 @@ def test_functional(testdir):
     result = testdir.runpytest("--no-assert")
     assert "3 == 4" not in result.stdout.str()
 
-def test_AssertionErrorIdentity(testdir):
-    testdir.makepyfile("""
-        def test_hello():
-            import exceptions
-            assert AssertionError is exceptions.AssertionError
-    """)
-    result = testdir.runpytest()
-    result.stdout.fnmatch_lines(["*1 passed*"])
-
 def test_triple_quoted_string_issue113(testdir):
     testdir.makepyfile("""
         def test_hello():
diff --git a/testing/test_collection.py b/testing/test_collection.py
index 9aa0fb96d..6e983e157 100644
--- a/testing/test_collection.py
+++ b/testing/test_collection.py
@@ -213,6 +213,19 @@ class TestCustomConftests:
         assert result.ret == 0
         result.stdout.fnmatch_lines(["*1 passed*"])
 
+    def test_ignore_collect_not_called_on_argument(self, testdir):
+        testdir.makeconftest("""
+            def pytest_ignore_collect(path, config):
+                return True
+        """)
+        p = testdir.makepyfile("def test_hello(): pass")
+        result = testdir.runpytest(p)
+        assert result.ret == 0
+        assert "1 passed" in result.stdout.str()
+        result = testdir.runpytest()
+        assert result.ret == 0
+        assert "1 passed" not in result.stdout.str()
+
     def test_collectignore_exclude_on_option(self, testdir):
         testdir.makeconftest("""
             collect_ignore = ['hello', 'test_world.py']