But mostly, GAE doesn't make sense for larger apps. You can't buy your way out of trouble, by putting your db on a dedicated server with fast drives and tonnes of RAM. You can't really use relational data without performance and reliability issues.
It's not just about the "app engine way". It's not like learning C or Haskell, and having to find a new way to write the code. You fundamentally cannot do big ad-hoc database operations.
And consider this - it was July last year that they introduced the MapperAPI. Before then, I don't think you could do Map-Reduce without manually re-implementing it yourself (on top of the cantankerous Appengine Datastore). Just think about that for a minute - how were you meant to do stuff the Appengine way without map-reduce?
Anyway, I don't think your credibility was "utterly destroyed". It was really hard to know whether or not the learning curve was worth climbing until you had tried. You just had to judge the book by its cover, and the "Google" brand is pretty compelling to an engineer. It's not the first time someone has been fooled into buying something because the provider has a good reputation.