Here is a variation of the last patch that behaves better when the
point is in empty lines above a defun.

Another entirely different approach to solve this issue without
redefining mark-defun could be to differentiate:

class M:
     def m():
          pass*

and

class M:
   def m():
      pass
*

(where * stands for the point)

In the second case, C-M-h will select the class, while in the first it
will select the method. Then, there would be no need to hack
mark-defun.

What do you think?