Personally think this is great news. Up until now (ignoring third party Python projects which have tried this), mod_python has had an awkward deployment mechanism (much like mod_perl, if you know it) requiring definition of handlers, within Apache. Python Server Pages make it pretty much the same as creating PHP pages – just tell Apache to watch out for .psp files and away you go.
As a solution for web applications, PHP has a significant head start over Python, with massive support amongst hosting providers and almost all the functionality you need “ready to go”. Also there’s a huge weight in supporting projects for PHP, as John Lim suggests here.
That said, Python comes with all those things that itch PHP developers, such as support for namespaces and an in-built (i.e. free) mechansim that stores a “compiled” form of your scripts. And things like the distutils solve many a headache for distributing your work.
So Python Server Pages is an alternative to PHP. Perhaps competition is a good thing, PHP being much like a monopoly these days.