Actually, I went with web.py after all. I blame temporary insanity. That, and web.py was easily understandable without a whole lot of docs to go through, and I wanted to get
something up quickly. We may yet rewrite in Pylons, but it's low priority, as web.py is working for us. (We also have practically zero traffic though.)
For templates, we use Mako after having previously used Cheetah, same as the rewritten Reddit. Mako is a very well-done, well-thought-out library. There were some things that Cheetah had a lot of trouble with (like unicode support and fragment libraries) that Mako handles without breaking a sweat.
For JS lib, we eventually settled on jQuery after having tried out Prototype, YUI, and Mootools (never used Mochikit, sorry). This was largely because that seems to be where the momentum is these days. Also, jQuery has a very elegant selector + plugin architecture and a growing collection of plugins. And it's the first JavaScript library I've seen that's intimately aware of namespace issues and tries to balance ease-of-use (no silly YAHOO.widgets.slider.SliderThumb chains here) and not-breaking-anything. This has been a major issue at my day job - we use several Prototype-dependent libraries and they all seem to be incompatible with each other, along with any other JS libraries.
On the downside, jQuery is still fairly immature, so you may have to write some widgets yourself that are provided with other libraries. That's changing quickly though, since many people are writing plugins now.