I got a free few minutes to work on my own site here. Since I migrated the site from all static pages to Django served, I still haven't put back the favicon icon back onto the site. The sites runs under a virtual host in apache2 at WebFaction. This is what you need to put in your httpd.conf file:

alias /favicon.ico /home/your-home/your-app-etc/static/image/favicon.ico

<LocationMatch "\.(jpg|css|gif|pdf|ico)$">
SetHandler None
</LocationMatch>

The alias line tells apache to go look for the favicon.ico file at a static location of your choice.

The LocationMatch directives tell apache to not run those files thru the Django engine.