It seems that around line 199 in the tgsetup.py file, the path "/usr/local/bin" is hardcoded. (On the webpage http://www.turbogears.org/download/index.html, the link http://www.turbogears.org/download/tgsetup.py)
The reason that this was a problem for me, is that I want to install the application in my home directory, since I do not have root rights on that particular machine.
All the other parts of the script work correctly with respect to the --prefix directive, but only this line will make the script crash, and will stop the installation. (Without root rights it is not allowed to create the pgadmin file in the /usr/local/bin directory.)
Except for the fact that it doesn't work for me, I think it is general bad form to ignore the --prefix directive and just put a file in that directory.
My suggestion is to retrieve the path of the --prefix directive from somewhere. I don't know how it works, but since the remainder of the script installs to the correct directories suggests this should be possible.