As it turns out my local setup was very much broken due to my misunderstanding of buildout / virtualenv.
The solution was to create two separate parts
with recipe = appfy.recipe.gae:app_lib
in my buildout.cfg. One part is for items that app engine includes when you deploy but not in the local app server. This uses a lib-directory
outside of the main application path. The second part is also a recipe = appfy.recipe.gae:app_lib
but it uses a lib-directory
inside of the folder of code being deployed to app engine.