Running google app engine locally tbehind a proxy
reset your proxy environment variables (http_proxy and https_proxy) while running the app server locally. You need them only when you are deploying your app to actual google servers.
I have been trying to run a small app using google app engine (python) on 8080. I am behind my college proxy which requires a username and password to login
here is what i get

INFO     2013-12-22 10:16:19,516 sdk_update_checker.py:245] Checking for updates to the SDK.
  INFO     2013-12-22 10:16:19,518 init.py:94] Connecting through tunnel to: appengine.google.com:443
  INFO     2013-12-22 10:16:19,525 sdk_update_checker.py:261] Update check failed: 
  WARNING  2013-12-22 10:16:19,527 api_server.py:331] Could not initialize images API; you are likely missing the Python "PIL" module.
  INFO     2013-12-22 10:16:19,529 api_server.py:138] Starting API server at: >localhost:35152
  INFO     2013-12-22 10:16:19,545 dispatcher.py:171] Starting module "default" running at: >localhost:8080
  INFO     2013-12-22 10:16:19,552 admin_server.py:117] Starting admin server at: >localhost:8000

but when i go to my browser to go to 8080...i get:

HTTPError()
  HTTPError()
  Traceback (most recent call last):
    File "/home/yash/google_appengine/lib/cherrypy/cherrypy/wsgiserver/wsgiserver2.py", line 1302, in communicate
      req.respond()
    File "/home/yash/google_appengine/lib/cherrypy/cherrypy/wsgiserver/wsgiserver2.py", line 831, in respond
      self.server.gateway(self).respond()
    File "/home/yash/google_appengine/lib/cherrypy/cherrypy/wsgiserver/wsgiserver2.py", line 2115, in respond
      response = self.req.server.wsgi_app(self.env, self.start_response)
    File "/home/yash/google_appengine/google/appengine/tools/devappserver2/wsgi_server.py", line 269, in call
      return app(environ, start_response)
    File "/home/yash/google_appengine/google/appengine/tools/devappserver2/request_rewriter.py", line 311, in _rewriter_middleware
      response_body = iter(application(environ, wrapped_start_response))
  INFO     2013-12-22 10:22:05,095 module.py:617] default: "GET / HTTP/1.1" 500 -
    File "/home/yash/google_appengine/google/appengine/tools/devappserver2/python/request_handler.py", line 148, in call
      self._flush_logs(response.get('logs', []))
    File "/home/yash/google_appengine/google/appengine/tools/devappserver2/python/request_handler.py", line 284, in _flush_logs
      apiproxy_stub_map.MakeSyncCall('logservice', 'Flush', request, response)
    File "/home/yash/google_appengine/google/appengine/api/apiproxy_stub_map.py", line 94, in MakeSyncCall
      return stubmap.MakeSyncCall(service, call, request, response)
    File "/home/yash/google_appengine/google/appengine/api/apiproxy_stub_map.py", line 328, in MakeSyncCall
      rpc.CheckSuccess()
    File "/home/yash/google_appengine/google/appengine/api/apiproxy_rpc.py", line 156, in _WaitImpl
      self.request, self.response)
    File "/home/yash/google_appengine/google/appengine/ext/remote_api/remote_api_stub.py", line 200, in MakeSyncCall
      self._MakeRealSyncCall(service, call, request, response)
    File "/home/yash/google_appengine/google/appengine/ext/remote_api/remote_api_stub.py", line 226, in _MakeRealSyncCall
      encoded_response = self._server.Send(self._path, encoded_request)
    File "/home/yash/google_appengine/google/appengine/tools/appengine_rpc.py", line 409, in Send
      f = self.opener.open(req)
    File "/usr/local/lib/python2.7/urllib2.py", line 410, in open
      response = meth(req, response)
    File "/usr/local/lib/python2.7/urllib2.py", line 523, in http_response
      'http', request, response, code, msg, hdrs)
    File "/usr/local/lib/python2.7/urllib2.py", line 448, in error
      return self._call_chain(*args)
    File "/usr/local/lib/python2.7/urllib2.py", line 382, in _call_chain
      result = func(*args)
    File "/usr/local/lib/python2.7/urllib2.py", line 531, in http_error_default
      raise HTTPError(req.get_full_url(), code, msg, hdrs, fp)
  HTTPError: HTTP Error 403: Forbidden
  Traceback (most recent call last):
    File "/home/yash/google_appengine/lib/cherrypy/cherrypy/wsgiserver/wsgiserver2.py", line 1302, in communicate
      req.respond()
    File "/home/yash/google_appengine/lib/cherrypy/cherrypy/wsgiserver/wsgiserver2.py", line 831, in respond
      self.server.gateway(self).respond()
    File "/home/yash/google_appengine/lib/cherrypy/cherrypy/wsgiserver/wsgiserver2.py", line 2115, in respond
      response = self.req.server.wsgi_app(self.env, self.start_response)
    File "/home/yash/google_appengine/google/appengine/tools/devappserver2/wsgi_server.py", line 269, in call
      return app(environ, start_response)
    File "/home/yash/google_appengine/google/appengine/tools/devappserver2/request_rewriter.py", line 311, in _rewriter_middleware
      response_body = iter(application(environ, wrapped_start_response))
    File "/home/yash/google_appengine/google/appengine/tools/devappserver2/python/request_handler.py", line 148, in call
      self._flush_logs(response.get('logs', []))
    File "/home/yash/google_appengine/google/appengine/tools/devappserver2/python/request_handler.py", line 284, in _flush_logs
      apiproxy_stub_map.MakeSyncCall('logservice', 'Flush', request, response)
    File "/home/yash/google_appengine/google/appengine/api/apiproxy_stub_map.py", line 94, in MakeSyncCall
      return stubmap.MakeSyncCall(service, call, request, response)
    File "/home/yash/google_appengine/google/appengine/api/apiproxy_stub_map.py", line 328, in MakeSyncCall
      rpc.CheckSuccess()
    File "/home/yash/google_appengine/google/appengine/api/apiproxy_rpc.py", line 156, in _WaitImpl
      self.request, self.response)
    File "/home/yash/google_appengine/google/appengine/ext/remote_api/remote_api_stub.py", line 200, in MakeSyncCall
      self._MakeRealSyncCall(service, call, request, response)
    File "/home/yash/google_appengine/google/appengine/ext/remote_api/remote_api_stub.py", line 226, in _MakeRealSyncCall
      encoded_response = self._server.Send(self._path, encoded_request)
    File "/home/yash/google_appengine/google/appengine/tools/appengine_rpc.py", line 409, in Send
      f = self.opener.open(req)
    File "/usr/local/lib/python2.7/urllib2.py", line 410, in open
      response = meth(req, response)
    File "/usr/local/lib/python2.7/urllib2.py", line 523, in http_response
      'http', request, response, code, msg, hdrs)
    File "/usr/local/lib/python2.7/urllib2.py", line 448, in error
      return self._call_chain(*args)
    File "/usr/local/lib/python2.7/urllib2.py", line 382, in _call_chain
      result = func(*args)
    File "/usr/local/lib/python2.7/urllib2.py", line 531, in http_error_default
      raise HTTPError(req.get_full_url(), code, msg, hdrs, fp)
  HTTPError: HTTP Error 403: Forbidden
  HTTPError()
  HTTPError()
  Traceback (most recent call last):
    File "/home/yash/google_appengine/lib/cherrypy/cherrypy/wsgiserver/wsgiserver2.py", line 1302, in communicate
      req.respond()
    File "/home/yash/google_appengine/lib/cherrypy/cherrypy/wsgiserver/wsgiserver2.py", line 831, in respond
      self.server.gateway(self).respond()
    File "/home/yash/google_appengine/lib/cherrypy/cherrypy/wsgiserver/wsgiserver2.py", line 2115, in respond
      response = self.req.server.wsgi_app(self.env, self.start_response)
    File "/home/yash/google_appengine/google/appengine/tools/devappserver2/wsgi_server.py", line 269, in call
      return app(environ, start_response)
    File "/home/yash/google_appengine/google/appengine/tools/devappserver2/request_rewriter.py", line 311, in _rewriter_middleware
      response_body = iter(application(environ, wrapped_start_response))
    File "/home/yash/google_appengine/google/appengine/tools/devappserver2/python/request_handler.py", line 148, in call
      self._flush_logs(response.get('logs', []))
    File "/home/yash/google_appengine/google/appengine/tools/devappserver2/python/request_handler.py", line 284, in _flush_logs
      apiproxy_stub_map.MakeSyncCall('logservice', 'Flush', request, response)
    File "/home/yash/google_appengine/google/appengine/api/apiproxy_stub_map.py", line 94, in MakeSyncCall
      return stubmap.MakeSyncCall(service, call, request, response)
    File "/home/yash/google_appengine/google/appengine/api/apiproxy_stub_map.py", line 328, in MakeSyncCall
      rpc.CheckSuccess()
    File "/home/yash/google_appengine/google/appengine/api/apiproxy_rpc.py", line 156, in _WaitImpl
      self.request, self.response)
    File "/home/yash/google_appengine/google/appengine/ext/remote_api/remote_api_stub.py", line 200, in MakeSyncCall
      self._MakeRealSyncCall(service, call, request, response)
    File "/home/yash/google_appengine/google/appengine/ext/remote_api/remote_api_stub.py", line 226, in _MakeRealSyncCall
      encoded_response = self._server.Send(self._path, encoded_request)
    File "/home/yash/google_appengine/google/appengine/tools/appengine_rpc.py", line 409, in Send
      f = self.opener.open(req)
    File "/usr/local/lib/python2.7/urllib2.py", line 410, in open
      response = meth(req, response)
    File "/usr/local/lib/python2.7/urllib2.py", line 523, in http_response
      'http', request, response, code, msg, hdrs)
    File "/usr/local/lib/python2.7/urllib2.py", line 448, in error
      return self._call_chain(*args)
    File "/usr/local/lib/python2.7/urllib2.py", line 382, in _call_chain
      result = func(*args)
    File "/usr/local/lib/python2.7/urllib2.py", line 531, in http_error_default
      raise HTTPError(req.get_full_url(), code, msg, hdrs, fp)
  HTTPError: HTTP Error 403: Forbidden
  Traceback (most recent call last):
    File "/home/yash/google_appengine/lib/cherrypy/cherrypy/wsgiserver/wsgiserver2.py", line 1302, in communicate
      req.respond()
    File "/home/yash/google_appengine/lib/cherrypy/cherrypy/wsgiserver/wsgiserver2.py", line 831, in respond
      self.server.gateway(self).respond()
    File "/home/yash/google_appengine/lib/cherrypy/cherrypy/wsgiserver/wsgiserver2.py", line 2115, in respond
      response = self.req.server.wsgi_app(self.env, self.start_response)
    File "/home/yash/google_appengine/google/appengine/tools/devappserver2/wsgi_server.py", line 269, in call
      return app(environ, start_response)
    File "/home/yash/google_appengine/google/appengine/tools/devappserver2/request_rewriter.py", line 311, in _rewriter_middleware
      response_body = iter(application(environ, wrapped_start_response))
    File "/home/yash/google_appengine/google/appengine/tools/devappserver2/python/request_handler.py", line 148, in call
      self._flush_logs(response.get('logs', []))
    File "/home/yash/google_appengine/google/appengine/tools/devappserver2/python/request_handler.py", line 284, in _flush_logs
      apiproxy_stub_map.MakeSyncCall('logservice', 'Flush', request, response)
    File "/home/yash/google_appengine/google/appengine/api/apiproxy_stub_map.py", line 94, in MakeSyncCall
      return stubmap.MakeSyncCall(service, call, request, response)
    File "/home/yash/google_appengine/google/appengine/api/apiproxy_stub_map.py", line 328, in MakeSyncCall
      rpc.CheckSuccess()
    File "/home/yash/google_appengine/google/appengine/api/apiproxy_rpc.py", line 156, in _WaitImpl
      self.request, self.response)
    File "/home/yash/google_appengine/google/appengine/ext/remote_api/remote_api_stub.py", line 200, in MakeSyncCall
      self._MakeRealSyncCall(service, call, request, response)
    File "/home/yash/google_appengine/google/appengine/ext/remote_api/remote_api_stub.py", line 226, in _MakeRealSyncCall
      encoded_response = self._server.Send(self._path, encoded_request)
    File "/home/yash/google_appengine/google/appengine/tools/appengine_rpc.py", line 409, in Send
      f = self.opener.open(req)
    File "/usr/local/lib/python2.7/urllib2.py", line 410, in open
      response = meth(req, response)
    File "/usr/local/lib/python2.7/urllib2.py", line 523, in http_response
      'http', request, response, code, msg, hdrs)
    File "/usr/local/lib/python2.7/urllib2.py", line 448, in error
      return self._call_chain(*args)
    File "/usr/local/lib/python2.7/urllib2.py", line 382, in _call_chain
      result = func(*args)
    File "/usr/local/lib/python2.7/urllib2.py", line 531, in http_error_default
      raise HTTPError(req.get_full_url(), code, msg, hdrs, fp)
  HTTPError: HTTP Error 403: Forbidden
  INFO     2013-12-22 10:22:05,141 module.py:617] default: "GET /favicon.ico HTTP/1.1" 500 -

I have set my proxy connections (with username and password) as environment variables in apt.conf files and my terminal works fine with it...
i use ubuntu 12.04