Your PyPy point is fair. A PyPy-oriented optimization effort could have improved performance. N/s by what magnitude though.
I did extensive benchmarking until there were no more hot spots, didn't help. Dropping into C or Cython was a non-goal. For dev an embedded Python web server is convenient but it doesn't have to be fast. When it comes to performance, it always makes more sense to use a native-code web server in production.