Still learning python (finally!) and can\'t quite wrap my head around this one yet. What I want to do is sort a dictionary of lists by value using the third item in the lis
You stated two quite different wants:
The first of those is by definition impossible -- to sort something implies a rearrangement in some order. Python dictionaries are inherently unordered. The second would be vaguely possible but extremely unlikely to be implemented.
What you can do is
"the third item in the list" smells like "the third item in a tuple" to me, and "e[1][2]" just smells :-) ... you may like to investigate using named tuples instead of lists; see named tuple factory
If you are going to be doing extract/sort/process often on large data sets, you might like to consider something like this, using the Python-supplied sqlite3 module:
create table ex_dict (k text primary key, v0 int, v1 int, v2 int);
insert into ex_dict values('item1', 7, 1, 9);
-- etc etc
select * from ex_dict order by v2;