TemplateDoesNotExist on python app-engine django 1.2 while template rendering relative paths

I'm running the 1.4.2 appengine SDK locally on a windows machine. I have an application running Django 0.96. The template rendering is using the django wrapper from

google.appengine.ext.webapp.template.render

to render templates. I often use a relative path to link my templates e.g

{% extends "../templates/base.html" %}

After upgrading to Django 1.2 the find_template method from django.template.loader in the appengine's Django 1.2 lib folder is now raising a TemplateDoesNotExist when the relative paths are used

for loader in template_source_loaders:
    try:
        #raises TemplateDoesNotExist name='../templates/home.html' dirs=None
        source, display_name = loader(name, dirs)
        return (source, make_origin(display_name, loader, name, dirs))
    except TemplateDoesNotExist:
        pass
raise TemplateDoesNotExist(name)

I've been stepping through the Django and AppEngine code for a while now but can't see any reason for this. Can anyone provide any more insight?

Thanks,

Richard