I did crosspost this to stackoverflow. Yes, I am still having the issue. It started this morning. The verbose log is below. To try to get around this, I deleted my local copy of the project, downloaded it again and reauthenticated. Still, no luck.
$ appcfg.py update . --noauth_local_webserver --verbose
02:05 PM Application: cynomix3; version: 1
2016-04-15 14:05:44,093 INFO sdk_update_checker.py:229 Checking for updates to the SDK.
2016-04-15 14:05:44,658 INFO sdk_update_checker.py:257 The SDK is up to date.
2016-04-15 14:05:44,728 INFO appcfg.py:2378 Reading app configuration.
02:05 PM Starting update of app: cynomix3, version: 1
02:05 PM Getting current resource limits.
2016-04-15 14:05:44,729 INFO appcfg.py:1693 Send: /api/appversion/getresourcelimits, params={'version': '1', 'app_id': 'cynomix3', 'module': 'default'}
02:05 PM Scanning files on local disk.
2016-04-15 14:05:45,404 INFO appcfg.py:2501 Processing file 'api_keys.py'
2016-04-15 14:05:45,406 INFO appcfg.py:2501 Processing file 'app.yaml'
2016-04-15 14:05:45,408 INFO appcfg.py:2501 Processing file 'bottle.py'
2016-04-15 14:05:45,411 INFO appcfg.py:2501 Processing file 'index.yaml'
...
2016-04-15 14:05:45,536 INFO appcfg.py:1693 Send: /api/appversion/create, params={'version': '1', 'app_id': 'cynomix3', 'module': 'default'}
02:05 PM Cloning 12 static files.
2016-04-15 14:05:46,425 INFO appcfg.py:1693 Send: /api/appversion/cloneblobs, params={'version': '1', 'app_id': 'cynomix3', 'module': 'default'}
02:05 PM Cloning 23 application files.
2016-04-15 14:05:47,880 INFO appcfg.py:1693 Send: /api/appversion/clonefiles, params={'version': '1', 'app_id': 'cynomix3', 'module': 'default'}
02:05 PM Compilation starting.
2016-04-15 14:05:48,793 INFO appcfg.py:1693 Send: /api/appversion/precompile, params={'version': '1', 'app_id': 'cynomix3', 'module': 'default'}
02:05 PM Compilation completed.
02:05 PM Starting deployment.
2016-04-15 14:05:49,405 INFO appcfg.py:1693 Send: /api/appversion/deploy, params={'version': '1', 'app_id': 'cynomix3', 'module': 'default'}
2016-04-15 14:05:50,083 INFO appcfg.py:2559 HTTP Error (HTTP Error 400: Bad Request Unexpected HTTP status 400)
02:05 PM Rolling back the update.
2016-04-15 14:05:50,084 INFO appcfg.py:1693 Send: /api/appversion/rollback, params={'version': '1', 'app_id': 'cynomix3', 'module': 'default'}