From what I have seen so far, it works pretty well. Note that I'm using iSeries Python 2.3.3. The fact that strings are natively EBCDIC can be a problem; it's definitely one of the reasons many third-party packages won't work as-is, even if they are pure Python. (In some cases they can be tweaked and massaged into working with judicious use of encoding and decoding.) Supposedly 2.5 uses ASCII natively, which would in principle improve compatibility, but I have no way to test this because I'm on a too-old version of OS/400.
Partly because of EBCDIC and partly because OS/400 and the QSYS file system are neither Unix-like nor Windows-like, there are some pieces of the standard library that are not implemented or are imperfectly implemented. How badly this would affect you depends on what you're trying to do.
On the plus side, the iSeries-specific features work quite well. It's very easy to work with physical files as well as stream files. Calling CL or RPG programs from Python is fairly painless. On balance, I find iSeries Python to be highly usable and very worthwhile.