"Virtual hosting of customer domains on a Google App Engine application is possible.
However it would appear that Google has implemented this functionality in a manner which is convenient for customers who are already using Google Apps.
If Google aims to make Google App Engine convenient for developers developing "major" applications, which may contain virtual hosting as a customer options, then they need to vastly simplify the setup procedure for virtual hosting on App Engine applications, and they need to totally remove the requirement for the customer of the App Engine application to have a Google Apps account.
And if they can't do that, they should at least allow for the possibility that a user of Google Apps is only interested in accessing App Engine apps, and that the user does not necessarily want to access any of the "standard" features of Google Apps."