On CentOS 5.5 Linux I can successfully build OpenBabel 2.3.0, including the Python bindings. I subsequently want to install to a staging area, so I then perform, for example,
make install DESTDIR=/tmp/openbabel
That correctly installs the OpenBabel binaries, libraries, etc. under /tmp/openbabel, BUT it attempts to install the Python extension directly onto the system (in my case, into /usr/lib64/python2.4/site-packages). It should instead install the Python extension to (in this example) /tmp/openbabel/usr/lib64/python2.4/site-packages.
This is not a bug. The Open Babel install should be configured using CMake parameters, not at the "make" stage. See the installation instructions.
If you want to discuss this in more detail, for example if you feel that our approach does not allow you to do something in particular, please send an email to the dev list and people can weigh in on this.