What does setup.py install --old-and-unmanageable actually do?

As a distro packager, putting a django app in a RPM seems fine to me.

There is no replacement yet, unless you consider pip a valid solution. See PEP 517 workflow for distributions for a detailed explanation. Essentially, the replacement would be to build a wheel (with GitHub - pypa/build: A simple, correct Python build frontend), and then install it, but currently there isn’t any useful wheel installer other than pip.