The mgetty-1.1.14 distribution contains a broken vgetty implementation. This has by long been fixed (more than a year ago to be exact. Fixes entered the mgetty tree around june). Please include a fixed vgetty, and a more secure mgetty. Use at least 1.1.18 (That is what I'm using. Keeps me from backing up my sources myself), and 1.1.20 seems to be even better. (1.1.18 works for me). And another thing: The spec is not really clean. It copies the entire policy.h from the patch into the source tree. Actually the policy.h-dist should be copied from the original source to policy.h, and only then patched.
Fixed (by upgrading) in mgetty-1.1.20-1. BTW, I don't understand your comment about copying policy.h-dist to policy.h: that is exactly what was happening in spec file.