Use the psycopg.Binary() function to escape the binary data:

>>> db = psycopg.connect("dbname=%s user=%s" % (database, user))
>>> db.autocommit(True)
>>> cursor = db.cursor()
>>> file = "/path/to/binary_file.jpg"
>>> fd = open(file, "r")
>>> contents = fd.read(os.stat(file)[6])
>>> fd.close()
>>> cursor.execute("INSERT INTO pr0n (image) VALUES (%s)", (psycopg.Binary(contents)))

If you're using the psycopg Python module to connect to Postgres, you may find that you have old scripts that use version 1 of psycopg but you have version 2 installed and don't want to modify your scripts. At the time of this writing (and according to http://initd.org/tracker/psycopg/wiki/Migration), the version 2 module provides a very easy "compatibility mode". Just import the psycopg1 submodule and alias it, or fall back to the version 1 module if version 2 is not available:

try:
    # Try importing the compatibility submodule, which will only
    # work if psycopg version 2 is available.
    import psycopg.psycopg1 as psycopg
except Exception, e:
    # Fall back to version 1.
    import psycopg