With your solution:
print polygon.wkt
'POLYGON ((40.6499999999999986 -114.0699999999999932, 40.2100000000000009 -112.9599999999999937, 40.0000000000000000 -112.6599999999999966, 39.3999999999999986 -112.7000000000000028, 39.3900000000000006 -113.2800000000000011, 39.6799999999999997 -113.9399999999999977, 40.4200000000000017 -114.2600000000000051, 40.6000000000000014 -114.2199999999999989, 40.6499999999999986 -114.0699999999999932))'
path = LineString([(42.049999,-96.25), (38.0880979565,-119.609216457)])
print path.wkt
'LINESTRING (42.0499989999999997 -96.2500000000000000, 38.0880979565000004 -119.6092164570000023)'
The result in Google Maps is really meaningless (obtained image with the OpenLayers plugin of QGIS)

So, it seems to me that there is an inversion in the coordinates of the points:
40.65 is the latitude of the point -> y
-114.07 is the longitude of the point -> x
and
from shapely.geometry import Polygon, LineString
l = "40.65:-114.07 40.21:-112.96 40:-112.66 39.4:-112.7 39.39:-113.28 39.68:-113.94 40.42:-114.26 40.6:-114.22"
# swapping the coordinates:
points = [[float(x) for x in c.split(":")[::-1]] for c in l.split(" ")]
print points
[-114.06999999999999, 40.649999999999999], [-112.95999999999999, 40.210000000000001], [-112.66, 40.0], [-112.7, 39.399999999999999], [-113.28, 39.390000000000001], [-113.94, 39.68], [-114.26000000000001, 40.420000000000002], [-114.22, 40.600000000000001]]
polygon = Polygon(points)
path = LineString([(-96.25,42.049999), (-119.609216457,38.0880979565)])
path.intersects(polygon)
False
I can plot the geometries in Google Maps and I see no intersection:

here is my code for google map:
https://gist.github.com/anonymous/8393151
it does show an intersection.
how you are plotting this on google map?
– probash Jan 13 '14 at 01:27