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For everybody facing the same issue, the answer is in one of the comments to this question.

If I move the creation of the named window(s) so that it happens in the callback function instead of in the Python object __init__ method then imshow and waitKey work as expected and the frame data is displayed in the window.

I can confirm that this workaround, albeit ugly, works as it should (I'm also trying to make camshift.py work).