Is Google working on delivering functionality akin to that in Microsoft's Dynamic Language Runtime?

Could be. And if so it would be a boon for developers using Google App Engine.

Some bloggers have speculated that Google may be following Microsoft's lead and creating something like the DLR to enhance development on the Google platform. The DLR is a Microsoft project to bring a set of services that run on top of the .Net CLR (Common Language Runtime) and provides language services for several different dynamic languages. The DLR has been used to implement dynamic languages like Python and Ruby on the .Net Framework—in the form of IronPython and IronRuby—and is a core element in Microsoft's push to enable the use of dynamic languages in the browser.

Microsoft's James Hamilton blogged on his speculation on a Google DLR look-alike.

The Microsoft database and development guru, and member of the company's Data Center Futures Team, said: "It’s hard to know for sure what is coming but the popular speculation is that Google will be announcing a dynamic language runtime with support for Python, JavaScript, and Java. A language runtime running on both server-side and client-side with support for a broad range of client devices including mobile phones would be pretty interesting."

I ran into Hamilton at the Google I/O developer conference in San Francisco last month and was anxious to see what he got out of the event. He apparently got a good deal out of it as he blogged on the event. But Hamilton said his speculation about a possible Google DLR comes from an upcoming talk by a Google engineer in Denmark at the end of September.

Meanwhile, should Google deliver a DLR-like substrate it would benefit developers on the Google App Engine, which currently only supports Python development—which was viewed as a hindrance to a lot of developers. Launched in April, Google App Engine is a platform for building and hosting Web applications on Google servers.