I wasted about a week on a known issue with GWT and AppEngine (link). The basic problem is that GWT requires the source of a Java class in order to provide access to that class on the client side. The issue is that age old problem of front end and back end version of objects that you encounter a lot. The fix would be if the App Engine team had done some consultation with the GWT team so that this restriction of the GWT wouldn’t mean trouble for developers using both. As it stands I’m going to use the light version of object solution.
Sucks that this problem exists, but, its what happens with a large company. Two teams go off and do something and the results are a little incompatible. It happens.