The large amount of excellent work being done on PyPy would seem to indicate that the Python community does not, in fact, pretend that performance isn't a problem.
I don't think it is denial per se, but rather mostly inertia. Python has been a victim of CPython's success, in the sense that there is now a huge body of work that is tied to the CPython API. This is a problem for IronPython and Jython, and continues to be a problem for PyPy (though they are making strides to solve it), and it will be a problem for newer projects like Pyston. Numba has sort of skirted the issue by integrating with CPython, but the jury is still out there.
