In their article , the three Google engineers, Toby Reyelts, Alex Rudnick and Lex Spoon show you how to implement Scala projects on the App Engine by taking you through two sample applications. They say "Overall, it looks like the scalac compiler produces jars that are so close to Java's that App Engine just doesn't notice or care. We can second that: it works for us too!"
They mention that Gabriele Renzi is using Scala with the Google Eclipse Plugin , meaning he gets to use tools like the "deploy to app engine" button and report that David Pollak has verified that most of the Lift framework  works on App Engine, and that he has posted a demo site  to prove it. Read more about it all in their article .