While Python is a sizeable part of App Engine (SDK, admin console, tooling .. some other things I can't remember right now), the majority of the code is Java and C++. It's one of the reasons Python isn't listed as one of the top needs (http://googleappengine.blogspot.com/2011/07/wanted-app-engin...) over C++ and Java.

That being said, it's a very Python friendly team. Guido's on it (HI GUIDO).