<p>I'm at the beginning/middle of a project that we chose to implement using GWT. Has anyone encountered any major pitfalls in using GWT (and GWT-EXT) that were unable to be overcome? How about from a performance perspective?</p>

<p>A couple things that we've seen/heard already include:</p>

<ul>
<li>Google not being able to index content</li>
<li>CSS and styling in general seems to be a bit flaky</li>
</ul>

<p>Looking for any additional feedback on these items as well. Thanks!</p>

No major pitfalls that I haven't been able to overcome easily. Use hosted mode heavily. 
As you are using GWT-ext you will almost never need to touch CSS yourself unless you want to tweak the out of the box look.
My recommendation is to use a GWT "native" widget over a library one where they are close in features.
Re search engine indexing: yes the site will not have navigable URLs normally (unless you are only adding widgets to elements of a regular web site). You can do history back/forward functionality though.