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I’ve been playing around with Google’s new hosted Python framework. I created a very basic wiki called WikiWikiWoo! just to get a feel of the system.
It’s based on Django and Paste and seems to be inspired by bits of web.py and maybe bits of Werkzeug.
The templating is directly Django’s, which I think is a shame as Jinja is very similar but better (vaguely useful error messages for a start).
The model is inspired by Django, but using Google’s Datastore (not an rdb), using GQL, their modified version of SQL. It wasn’t easy to get going with, which is partly the fault of the documentation (it took me ages how to work out how to do their version of a primary key).
Once you get the hang, it’s pretty simple for quick simple data. It would be tough going to work out how to do complex relationships with it, particularly for anyone from a traditional rdb background (like me). There’s no section where they explain how their datastore works and the concepts behind it. I’ve been playing with Couchdb recently and they did a wonderful job of explaining the overall concept before going into how to use it. That kind of conceptual overview for Datastore would probably make a world of difference.
The controllers seem to be inspired by Web.py. They are classes with methods for POST, GET, etc. I like that system from playing around with Web.py. It allows you to very easily use the same URL for displaying an edit form and saving an item. It keeps your code nicely grouped, but I think it would make it a little more difficult to create generic CRUD controllers (maybe having to use meta-class magic).
The routing seems based on a corrected version of Web.py’s. It fixes the annoying list of tuples into a proper list of lists of tuples. It uses basic regexs for routing (first one that matches wins), and a direct reference to a class. This means the routing has to go at the end of the module (which is different to most other frameworks). I like it and it’s exactly how I set up the routing when I was messing around with WSGI.
Sessions and deployment are the killer features. Deployment is just a single command that uploads all your files, and restarts your app. Session handling uses the Google login system, so sessions are completely abstracted away. These are often the hardest bits to get right when using a new framework, so they’ve done impressively well to make them so simple.
Overall, I’d say it could be outstanding for quickly knocking out an app you’ve just thought of. A simple app will scale beautifully if it suddenly becomes popular (no more slashdotting) and they’ve solved the more annoying problems for webapps. I would have some concerns about trying to create a huge complex app using it, but we’ll see. Certainly I’ll use it again if I ever have a good, simple idea. For my bad, complex ideas I’ll continue building my own framework 
As an update, it appears you can use almost any Python modules in your code as long as you add them into your project folder (either copy the package or if you use a symlink it will copy them automatically). That would mean that everything hinges on their storage. Sessions and deployment are excellent, and everything except for the model you can do yourself. If their storage is easy to use with potential longterm power, then it could big, and a serious choice for hosting major sites.
The only other issue would be one of branding. As the login makes it clear that you are using a Google AppEngine, I don’t see big companies using it. That’s a good thing as it gives us open minded charities a leg up on the over-resourced private sector.