The following code throws an UnboundLocal error:

def f(x):
    def g():
        x = x + "a"
        return x
    return g()
f("b")

This is expected behavior: http://docs.python.org/faq/programming.html#why-am-i-getting-an-unboundlocalerror-when-the-variable-has-a-value

Assignment in Python creates a new binding. Whether the new binding shadows or replaces an old binding should be irrelevant. This behavior is inconsistent with that. Please fix expectations, and then Python interpreter.

What fails here is the evaluation of "x", not the assignment!

You are right concerning the assignment, the outer definition has no effect at all.  The very presence of "x = " in the function code turns x into a local variable for the whole function; so 'x + "a"' fails because the local variable has not value yet.

Python, unlike Lisp, defines scopes lexically, not dynamically. There is no "previous" binding, but "local" or "outer" scopes.