You probably just want to add the items to the list, rather than appending them:
with open('textfile.txt') as f:
list = []
for line in f:
line = line.split()
if line:
list += [int(i) for i in line]
print " ".join([str(i) for i in list])
If you append a list to a list, you create a sub list:
a = [1]
a.append([2,3])
print a # [1, [2, 3]]
If you add it you get:
a = [1]
a += [2,3]
print a # [1, 2, 3]!