Yes, really, I totally missed this one. I was sure that I had XCode, that I had installed it from the AppStore.
Several frustrating moments finally led (via StackOverflow!) to the realisation that XCode is only downloaded, and still needs to be installed afterwards. So just go to your application folder and find the “install xcode” app and double-click it.
Duh (slaps forehead) !
Oh well, onwards with the show of getting mysql-python to install on 10.7.
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