Thanks, Stifan! Turns out I was working too hard. This is the modern way to 
do it.

model db_pos.py:

db=DAL('sqlite://storage.sqlite')

db.define_table('supplier', Field('name'), format='%(name)s')

db.define_table('item', Field('name'), Field('supplied_by', db.supplier))

controller default.py:

@auth.requires_login()

def items():

   grid=SQLFORM.grid(db.item)

   return locals()

@auth.requires_login()

def suppliers():

   grid=SQLFORM.grid(db.supplier)

   return locals()

-- 
Resources:
- http://web2py.com
- http://web2py.com/book (Documentation)
- http://github.com/web2py/web2py (Source code)
- https://code.google.com/p/web2py/issues/list (Report Issues)
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