Deploying an app to users' appspot
Yes, absolutely.
You just need to have each client create an App Engine account with an application to which you have administrator access. You can adjust the settings on the application to forbid downloads of your code by the other administrators if that's appropriate for your agreement with the client. This also allows the clients to be billed directly for their instances' usage, and makes it completely impossible for data to leak between different clients' instances.
Using multiple applications for multiple clients who are licensing your application almost certainly does not violate part 4.4 of the TOS, although don't take this as legal advice.
I am working on a Python App, which runs on App Engine. Is there a way I can publish the app on each customers' appSpot account, so that the App uses the users' cloud storage? Instead of running the App on my AppSpot account and all the users storing the data on my Cloud space?