I have the same problem and tried many times.
As people have observed, which is documented in the readme, the built python library is in the build directory instead of the original Caffe source directory. In the original Caffe, the latter is used. However, if I need to build pycaffe from multiple branches, the built python library will override each other in the source directory, even though the C++ libraries and binaries of different branches can coexist in different build directories. Therefore, I changed Makefile in caffe-dilation so that the python libraries and source files are put in the same build directory with the other source files in the same git branch.
However, the user will have to add python/ in build directory to PYTHONPATH instead python/ in the caffe source directory.