Why don't django templates just use python code?
Don't forget that you aren't limited to Django's template language.  You're free to use whatever templating system you like in your view functions.  However you want to create the HTML to return from your view function is fine.  There are many templating implementations in the Python world: choose one that suits you better, and use it.
I mean I understand that these templates are aimed at designers and other less code-savvy people, but for developers I feel the template language is just a hassle. I need to re-learn how to do very simple things like iterate through dictionaries or lists that I pass into the template, and it doesn't even seem to work very well. I'm still having trouble getting the whole "dot" notation working as I would expect (for example, {{mydict.dictkey}} inside a for loop doesn't work :S -- I might ask this as a separate question), and I don't see why it wouldn't be possible to just use python code in a template system. In particular, I feel that if templates are meant to be simple, then the level of python code that would need to be employed in these templates would be of a caliber not more complicated than the current templating language. So these designer peeps wouldn't have more trouble learning that much python than they would learning the Django template language (and there's more places you can go with this knowledge of basic python as opposed to DTL) And the added advantage would be that people who already know python would be in familiar territory with all the usual syntax and power available to them and can just get going.
Am I missing something? If so I plead django noob and would love for you to enlighten me on the many merits of the current system. But otherwise, any recommendations on other template systems that may be more what I'm looking for?