I built a CMS using mod_python a couple of years ago. It's currently hosting two sites: phoenixchildrenshospital.com and turntableband.com.
I ended up taking the lazy road and using Basic Auth, but I have pretty much the same opinion as you. It sucks. It's horribly limited, and implementing "logout" is arguably impossible (Zope seems to pull it off, sorta, kinda).
So, you've got some setup to do before mod_python is ready for a CMS, mainly session managemet, authentication, templating, and database interfaces, but once you get past that, mod_python is a total joy to program in. So simple! It does exactly what it's supposed to do; no more, no less.
I especially love the "publisher" module, since it lets me completely close the gap between URLs and function calls.
I haven't tried Webware, but I've heard great things about it. I was initially very impressed with Zope, but my main beef with it is that it tries to appease content editors and programmers through the same interface, and as a result, feels very crippled. Am I supposed to write my code in Zope, or on the file system? If I write inside of Zope, I have to expose system functionality through external methods or products, and it's so constrained and filtered that I barely feel like I'm using Python anymore. mod_python let me just write Python, with the added convenience that I can make a page just as easily as I can make a function.
Good luck with your project.