What Google will do for you:
To do this the application stack they provide has:
Their environment does allow you to run a local test server, so you can do your application development on your own private machine.
They provide a basic Django template module.
Seems to follow the Python wsgiref module.
An initial presentation of this is in these videos.
One of the things this does is to get you to build things using Google tools which may result in an implementation that is difficult to move to some other service provider without doing a complete rewrite. Whereas if you were using Amazon's EC2 you are writing for a more standard LAMP style environment so you should be able to take whatever you develop and run it somewhere else. Of course, if you keep this all in mind it might not be a big issue, use the Google tools to develop a prototype and test the waters before investing in a full scale project.
With Google's use of Python as the first application language to be supported by this system it has caused an unprecedented stir in the Python community, see: