2.12.2 is definitely not broken, since that's what I've been using live on GAE for about six months. (
www.trytha.com)
I did the precise steps I outline above while I was preparing the post. Not much to it, and it started working again as soon as I replaced the new /pydal with the old. I've been beating my head against this for two days. I thought it was just a problem I was having deploying locally since I had gotten things working on GAE last year (I had skipped a local GAE deployment at that time). This morning I decided to just try my known, server-side-working app (2.12.2) locally and it worked with no issues. That's when I started swapping out directories until I found the offender was /pydal. I also tested 2.12.3 and it does NOT work.
I would really love to be using the latest version. Hopefully if it's a mistake on my end, you might have some insight into where I've stepped off the path.