You wont find many embedded applications running a python interpreter - but you will find is python code running on a PC controlling / testing embedded apps.
I used php in an embedded application some years ago, this not so diffrent from using pyhton. It is not a bad idea if python is a good language to develop your app and if you know it. Anyway not all embedded systems have enough resources to support these kind of languages.
Python is used in the Telit GSM modules. It has built-in Python interpreter and it seems to allow 3mb of the python code. I haven't use the Telit part but I heard it is very easy to get a application running.