I'd argue that there is nothing crippling about it. You can define functions anywhere, if you need a multi-line lambda just define a function and be done with it. Multi-line lambdas are messy... this constraint keeps your code sane.

You can nitpick all you want, but the fact is I can start reading just about anyone's python code and feel like it's my own because styles are consistent across the board. A lot of this has to do with the tight community, but the fact that it's all reinforced through syntax constraints is a huge plus.