> ...get a list of primary keys from A table using

kinterbasdb.cursor.execute() method and roll out as a Python list using
interbasdb.cursor.fetchall().

> For each of the elements in the list (primary keys), it is used to

pull out a record in another table for processing

Instead of getting a list and looping through the list selecting from
another table, select directly from a join between the two tables, which
presumably are connected by a foreign key.
Can you post the DDL for the two tables, including foreign keys and
indexes, and the plan used by the optimizer?

> ...insert the results (usually a few records) into another table.

This process is repeated for about 500k times.

Does this need to be one transaction, or can you commit every 10,000
items?

Since the sysadmin installed it just for you, do they do any
maintainence such as sweeps or index selectivity calculations?
I'm guessing that regular maintainence is done on the other databases,
including vacuuming the Postgres, your other MGA database.