This is one miserable problem with a very simple solution. It has to do with multiple python interpreters in mod_python v.3.2.8 and multiple virtual hosts. To remedy the situation, add the following line inside your <VirtualHost> declaration in your apache conf file:
PythonInterpreter main_interpreter
Restart server and all will be better. For more info see trac ticket #3455
UPDATE: All is not well in the world of mod_python and trac. The above solution does improve matters but there are still issues. Many are suggesting to use mod_wsgi with trac to manage multiple sites on virtual hosts. Is this the beginning of the end of mod_python?