following directions in selinux handbook on http://www.gentoo.org/proj/en/hardened/selinux/selinux-handbook.xml?part=2&chap=1 at section 2.3 if you selected targeted policy instead of strict, the emerge -uDN world, will fail as it attempts to look for file contexts in /etc/selinux/strict/contexts/files/file_contexts which does not exist.
Can you provide more information about this? Error log or build log? It seems I've hardcoded "strict" somewhere then, so I need to cover that.
Well I don't have the error message specifically up at the moment. However when you proceed as directed at step 2.3, any emerge will fail as it looks for file_contexts in /etc/selinux/strict/contexts/files/file_contexts... following step 2.6 and modifying /etc/selinux/config to specify POLICY="targeted" instead of the default "strict" will allow you to keep building a targeted system. It's just an order of operations in the instructions really. Only thing that could be automated I guess would be /etc/portage/make.conf POLICY and /etc/selinux/config SELINUXTYPE to match.
This has been put in place online. Thanks for reporting!