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Have you seen this form?
http://code.google.com/support/bin/request.py?c...
"App Engine's quota system allows for efficient applications with billing enabled to scale to around 500 queries per second (qps) or more than 40 million queries per day. This is a substantial amount of traffic and should easily suffice for even the heaviest of Slashdottings. But if you expect your application will need to handle even higher qps, please complete this form so we can assist you."
We probably don't make that form, or the reasoning behind the policy, visible enough. Discussing that with the team now.
I'm not saying 500 is not a lot, even with like 30 elements on a page you could probably still do like 50k visitors an hour - but inside every app developer's dreams is the idea of becoming the next Google, who I'm sure handles well over 100k queries a second.