I was able to track down to what seems like a bug in TG2 RestController?. The delete operation does not seem to work on nested controllers. With the following fix, it works.
582c582,583
< elif remainder_len >=2 and (method == 'post' or method ==
'put') and hasattr(obj, 'get_one'):
##### elif remainder_len >=2 and (method == 'post' or method == 'put') and hasattr(obj, 'get_one'): elif remainder_len >=2 and (method == 'post' or method == 'put' or method == 'delete') and hasattr(obj, 'get_one'):
Hope this helps! It would be great if a TG2 developer can confirm this bug (and fix).
The file with the purported bug/fix:
tg/controllers.py
http://groups.google.com/group/turbogears/browse_thread/thread/5a0338fd58e020a9
Thanks! ozwyzard