LOVE2D is a joy to work in. It really is fun, it makes particle effects and physics and sound easy. The community is awesome.
I have been working, since September, on my senior project in Pygame. It isn't fun to work in. The documentation is great, but the community seems dead. Things are not easy in Pygame. Distribution is especially painful, with py2exe and py2app and setuptools. I've had a lot of trouble getting certain sounds to play. I would not recommend it.
Really, go with LOVE2D or Flixel or even Flash if you want to make games in a high level language. Not only that, but if you want to have _fun_ making a game, and not get bogged down in low-level details.
Seems to be somehow possible to get it working. It is not officially supported, though. I guess as luajit matures there is a decent possibility that it will be a supported option since games (even 2d) would benefit from the increased speed. OTOH portability of love2d would probably be decreased, too.
Also, I understand that some people (including me) do have fun tinkering with low level details and tiny optimizations, but when you're making a small game with a small (even solo) team, these tasks tend to work against making a good game.
When making a game the "low level details and tiny optimizations" that you want to concentrate on are the ones that make the game more fun: fun little touches. Sometimes that requires code optimisations but mostly it involves the kind of special-case actions and quirky animations that make for great gameplay but nasty-looing code :)
Py2exe is quite easy to use, i've used it for a few gui apps and did not run into any problems(actually had a small problem getting image resources recognized, but that was in wxpython's end).
Also, py2exe is reliable and not that difficult to set up, but py2app is a bit of a pain. The resultant .app directories are also pretty big. My game is 6.5mb in Windows, and 32mb in OS X.
PyGame is lower level than LOVE; it lacks several of the nice extras like built in sprite animation and a physics engine. On their own, each individual feature of LOVE is not a huge deal. But I've found that they add up in the time it takes to implement them using PyGame.
At this year's Global Game Jam (a rather fun event where participants create a game in 48 hours), most of the people from our site used Love, despite having no experience with either it or Lua.
You can view what my 5-person team created on GitHub: https://github.com/icco/RainbowDeathSwarm . It's rather horrid, but I suppose it's decent considering our lack of knowledge of either the language or making games.
I showed Love to my kids over the school holidays, it was a nice sweet package. Single exe, runs on Windows, and there were enough tutorials to get one started. The only thing I had a problem with was with the names of some of the libraries, which had overt sexual overtones.
Having said that, this looks very interesting and I'll definitely keep an eye out for it in future.