Local SDK _does not_ emulate deployment environment quotas
I'm seeing a lot of posts on the Google App Engine forums about apps breaking when deployed. I'm assuming that a fair number of these are because the local SDK does not impose the same quota limits that the deployment environment has.
What may be confusing people is that the local SDK does impose the language limits in Python. To see exactly what's different (what you can use, what you can almost use, and what you cannot use), check out the source for dev_appserver.py in the local SDK.
I hope this helps clear up some of the confusion.
It would be good, in the future, to have the ability to run the local server with and without quotas in place.
With quotas for simulating deployment environment behavior, and without quotas when running tasks that will only run locally and that would be otherwise be negatively affected by the quotas (e.g., restoring a backup).