If I have clearly understood the code, mercurial web access to the repositories is done by spawning a python process and using the mercurial hgweb CGI interface. Spawning a process at each user request is not very performant.
I have suggestions: 1. A possible enhancement would be to use jython and execute hgweb/mercurial directly in the JVM. 2. Another possibility would be to use a FastCGI interface to hgweb (with http://code.google.com/p/fcgi4j/ ?). 3. And the third option would be to setup an apache server with mod_wsgi outside SCM Manager and pass all request for mercurial to this server.
Option 1 would probably be better but would mean more work. Option 2 seems simplier but performant also.