Description of problem:  
Need to have "restorecon /dev/pts" after "mount -n /dev/pts >/dev/null 2>&1"  
in /etc/rc.d/rc.sysinit so that the correct context is assigned on MLS 
systems.  This will have no affect on non-MLS systems (apart from a small 
fraction of a second taken for the operation) but is required for correct MLS 
functionality. 
  
Additional info:  
https://bugzilla.redhat.com/bugzilla/show_bug.cgi?id=185436 
 
The root cause of this is a deficiency in the kernel code (see above 
bugzilla).  Fixing the kernel code in question is not going to be easy and 
will not happen in the near future.  So we need to have a work-around in init 
scripts.