You certainly can, but it would require updating all references to the files (such as in html/js/css files) to contain the "static/css, /static/js, ..." part of the path.  I went with the easier approach of just changing the app.yaml instead of all js files and html files.

If you think it's worth it then I could go through the files and make the changes, I was just worried I'd miss references since I'm seeing this codebase for the first time.  Although Eclipse would minimize that risk