Louie "provides Python programmers with a straightforward way to dispatch signals between objects in a wide variety of contexts. It is based on PyDispatcher, which in turn was based on a highly-rated recipe in the Python Cookbook." Louie is like an event system used in a GUI toolkit. Similarly, you can think of Louie as an internal pubsub system. Twisted is a framework for building asynchronous network servers. Using Louie in your Twisted applications can make your applications a little less "twisted".
When you code a Twisted application, you often put a lot of your logic in custom Factory and Protocol classes. However, if you have one application that has to talk to, say, three different types of servers, and you have a custom Protocol and Factory class for each server (perhaps each server speaks a different network protocol), it can be confusing to have your application logic broken up all over the place. Louie can help with that.
When you are implementing a Protocol class, when you receive a new Twisted event, you can generate a Louie event. In that way, you can have a single application-specific class that responds to events from a wide variety of Twisted Protocol classes. When I used this approach on my Twisted application, the code went from being very "scatter brained" to something more linear. I had a bunch of small functions that each responded to Louie events, and all the functions were in order in the same class. It certainly helped me wrangle control of the complexity of the system.
It may seem strange to translate Twisted events into Louie events, but considering the fact that Louie has support specifically for Twisted and considering the fact that I learned this trick from Drew Pertulla, a Twisted user, I know I'm not the only one using this trick.
I have a couple more tips. First of all, Louie tries really hard to pass only the arguments that your function is looking for. Hence, if your function doesn't accept a sender argument, it won't pass a sender argument. This is really helpful, but it can bite you. The magic tends to break down if your function is wrapped by a decorator or if your function is a closure (i.e. a nested function). In these cases, Louie can't figure out exactly which arguments to pass, and stuff can break. However, it's usually easy to work around situations like this once you figure out what's going on.
I have one other mildly off-topic trick for working with Twisted. Queues and Twisted work really well together. If you have one piece of Twisted code that simply reads from a queue and then does something, then other parts of the Twisted code can put things in the queue in a synchronous manner. It sounds simple, but this one trick really helped me out a few different times.
Last of all, I wanted to mention gevent. Twisted is certainly a mature library with support for a range of protocols, but if you're working with green field code, you might want to take a peek at gevent instead. Aside from having excellent performance, it also lets you write code in a synchronous manner, which is helpful for mere mortals like myself. If you're thinking about using Twisted vs. gevent, check out this talk that the Meebo guys gave at PyCon.