I found:

- Long integer shift/mask operations now simulate 2's complement
  to give more useful results for negative operands

in Misc/HISTORY, for the Python 0.9.6 release.  That's different, though:  it's about Python's semantics, not C's.  It's orthogonal to the question of whether the underlying C implementation uses two's complement, ones' complement or sign-magnitude.

I can't find any explicit indication of a decision to assume that the hardware integers are two's complement anywhere;  as far as I know, no such decision was ever taken.

But of course your simplifications are valid regardless of the integer representation of the machine.