Ok, I found a good solution for this question. Basically, just install the sendmail tool, then use the --enabled_sendmail option when calling dev_appserver.py. So here is what I did (I use Ubuntu):
sudo apt-get install sendmail
Then whenever I call dev_appserver.py, I call it like this:
~/google_appengine/dev_appserver.py --enable_sendmail --port=8081 ./appengine/
Note the --enable_sendmail option.
I believe that there can be no easier solution than this :-)
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