As an experiment, I imported django-guardian from the *.dsc files to git using git-dpm, and applied my changes. Not sure if I have got this right, it was the first time I used git-dpm.
This fixes some of the easy Django 1.7 issues, however, I am still stuck on the CircularDependencyError mentioned above.
At the moment, am wondering if maybe this is a Django 1.7 bug.