Thanks for the tip! I'm definitely going this route.
It's my second try (from scratch) on setting up a development environment and so far, still no luck. On both tries, it complained "pylupdate4 and pyrcc4 will not be built because the Qt XML module is missing" but a check of the directories showed QtXML4.dll, etc exist. Finally tried using a binary of PyQt4 and that seemed to install fine so I edited the PyQtconfig.py to point to the directories I'm using. When I tried to setup Calibre, though, got the error "cannot import name msvc9compiler". Oh well...
It's really cool the debug option will let you change modules on the fly. Thanks again, kovid!