It's really just a tool like your editor. I personally dress for expedience. There are some forums where i have to go to where power dressing really does have a positive outcome. There are some places (eg. code sprints) where a T-shirt and an old pair of jeans works better.
>One solution is to send a (moderately complex) programming
>problem by email and ask them to send code back. This will
>weed out a lot of people without wasting your time.
This is I think the best solution. A friend works at a company here called Tachyon and they have this part as part of the form on their jobs site where you can apply for jobs.
http://tachyon.in/jobs.html
While not as much as in the west, there are plently of companies that use Python in India and not all of them "do crap work outsourced to India". Here's a list
A local user group in Bangalore is organising the first Indian PyCon right now and we've talked to many companies (some Indian and some not) about sponsorships because they use Python.
Freelance web development (not much) and corporate training (might sometimes make more than my day job). This is in India where service companies abound and they have high training budgets.