using django-jython
I was able to get django 1.2 working just fine in jython 2.5. You will have to use the SVN build of django-jython. 
I would recommend that you use Java 6 I was able to get it running in Java 5 but I had to rebuild the ruby file system jar and remove the Java 6 database drivers from the packaged war. So you wont end up with war file that can be deployed on any environment unless you are using Java 6.
I have read from  the django-jython wiki that 1.1.1 is not compatible with django 1.2, and that jython does not works with the default django backend.
Does this means I'm unable to use django 1.2 with jython at the moment?