I'm not entirely sure I understand quite what you mean, but template based inheritance works fine for my application. You should be view to view the code at
http://code.google.com/p/shipwreck/source/browse
if you look in trunk/shipwreck/templates you can see that I have a tempalte called base.html which contains a number of {% block xxx %} directives, and in the index.html I have the first line being {% extends "base.html" %}
It could well be your configuration that is affecting it, you should amke sure that your django settings.py file has
ROOT_PATH = os.path.dirname(__file__)
and
TEMPLATE_DIRS = (
ROOT_PATH + "/templates",
)
Hopefully that should fix it.
--
Michael Brunton-Spall
http://www.mibgames.co.uk