You are absolutely right, thank you for the advice. I am going to update the article as soon as django 1.2 is supported via use_library() to reflect this. Cold startup time really is a bummer for low traffic apps.
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Yep, cold hits are a pain. They're bad for low traffic apps because App Engine will deallocate all resources if your app hasn't been hit in a while. Interestingly, cold hits are bad for apps with spiking traffic, too: as your load spikes, App Engine tasks new machines each of which may experience a cold hit. (It depends on their caching internals, subject to change.)
As for use_library() vs App Engine Patch: for me, the perf issue is primary. On the other hand, AEP offers a lot of functionality out-of-box that you don't get with raw use_library() django.