Python script executable opened by text editor

I have a simple "Hello world" script that I want to turn into an executable. The problem is that even though I went through the steps of declaring the path of the Python interpreter in the first list of the code and made it executable via chmod, it does not run as an executable. Instead when I click it my text editor opens up the file. This sounds really stupid, but I've tried everything. ./hello.py prints Hello world in the Terminal.

I've tried changing the file to open with the Terminal instead, but it's greyed out.

#!/usr/bin/python
print 'Hello world'

What I typed in the terminal:

chmod +x hello.py
./hello.py

Output:

Hello world

The problem is that double clicking the script opens text editor instead of running it as an executable.

What I tried:

Changing what the file uses to open itself by having it default to the Terminal, but OS X grays out that option.

Removing the file's extension should cause the file to open in your default terminal application. Alternately, you could select "All Applications" from the "Enable" menu in the "Open With" dialog to enable opening with "Terminal.app" regardless of the file's extension.

Change the file extension from .py to .command.

With the .command suffix the file will become associated with Terminal.app. When opened, the file will open with Terminal.app and immediately be run within a new terminal window.