Firing up Terminal from an Automator Workflow?
Figured out how to do it myself based upon adapting the following article.

http://hints.macworld.com/article.php?story=20050827164648766

Added a line in to run the python command:

on run {input, parameters}
  tell application "Terminal"
    activate
    if (the (count of the window) = 0) or ¬
     (the busy of window 1  = true) then
      tell application "System Events"
        keystroke "n" using command down
      end tell
    end if
    do script "cd \"" &amp; (POSIX path of ¬
     (input as string)) &amp; "\"" in window 1
    do script "python -m SimpleHTTPServer 8000" in window 1
  end tell
  return input
end run