Python is indeed making great strides as a desktop development platform and am not sure that we are in the business of competing with it. If people like writing Python code, they should just keep writing python code.
Myself, I like the IronPython variation of Python more. IronPython just happens to be JITed Python and in most tests it is faster than CPython. For the past year or so, we have also been in love with Boo, another .NET language. Boo has support for strong typing, so for certain scenarios you will get even better performing code (basically, when you can determine the type of a variable ahead of time, instead of having the variable be entierly late bound).