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The following code snippet will crash IDLE:
>>> import sys
>>> sys.setrecursionlimit((1<<31)-1)
The crash happens immediately and is consistently reproducible (environment: Windows 7 SP1 64-bit, Python 2.7.2 for Windows X86_64).

Trying to set the recursion limit to a large number defeats its purpose. As documented in the Standard Library Reference:
The highest possible limit is platform-dependent. A user may need to set the limit higher when she has a program that requires deep recursion and a platform that supports a higher limit. This should be done with care, because a too-high limit can lead to a crash.
http://docs.python.org/library/sys.html#sys.setrecursionlimit 

On the other hand, there is no reason for the recursion limit to be actually reached, just by setting it! Is there a hidden infinite recursion somewhere?

hanji, could you start IDLE from a command prompt and try again:
 c:\python27\python.exe -m idlelib.idle
Do you see additional error messages?

But after setting it, IDLE is going to be executing code. In the 64-bit Windows Python 2.7.2 that I have available, there were exceptions reported in the command line interpreter (not IDLE) after changing the recursion limit and then executing some code. Perhaps there is another of the known overflow error issues here. OTOH, similar reports have also been closed as "won't fix", most recently Issue12468. This doesn't seem worth the effort to investigate further. Feel free to reopen if you disagree.

@amaury.forgeotdarc
It says 'python.exe has stopped working'. Details:
 Problem Event Name:	APPCRASH
 Application Name:	python.exe
 Application Version:	0.0.0.0
 Application Timestamp:	4df4b010
 Fault Module Name:	MSVCR90.dll
 Fault Module Version:	9.0.30729.6161
 Fault Module Timestamp:	4dace4e7
 Exception Code:	c00000fd
 Exception Offset:	000000000001edcf
 ... ... ...
P.S. I'm well aware recursions won't go that deep. But crashing IDLE (instead of Raising an Error) by simply setting an option is still annoying.

Tested on Linux:
Python 2.7.2+ (2.7:16c4137a413c+, Dec 4 2011, 22:56:38) 
[GCC 4.4.3] on linux2
>>> import sys
>>> sys.setrecursionlimit((1<<31)-1)
>>> import xx
Exception RuntimeError: 'maximum recursion depth exceeded in __subclasscheck__' in <type 'exceptions.ImportError'> ignored
Exception RuntimeError: 'maximum recursion depth exceeded in __subclasscheck__' in <type 'exceptions.ImportError'> ignored
Traceback (most recent call last):
This comes from PyErr_GivenExceptionMatches() which tries to "Temporarily bump the recursion limit", and calls Py_SetRecursionLimit(reclimit + 5); without any consideration for 32bit int overflow... and PyErr_WriteUnraisable() is called to display the error.
IDLE crashes (with a real stack overflow) because sys.stderr is a special RPCProxy object whose methods are found through a __getattr__. But __getattr__ is called when __getattribute__ raises AttributeError, right? To implement this, PyErr_GivenExceptionMatches() is called again, fails again, call PyErr_WriteUnraisable()... recursively.
The fix should be easy: do not bump the recursion limit when it's already too high.

Here is a patch, with test.

LGTM

New changeset 57de1ad15c54 by Amaury Forgeot d'Arc in branch '2.7':
Issue #13546: Fixed an overflow issue that could crash the intepreter when
http://hg.python.org/cpython/rev/57de1ad15c54 

This will be fixed in the next 2.7 release, thanks for the report!

Style nit: how about
 'except ValueError as e'
instead of
 'except ValueError, e'
(Actually, why do we need e?)

'e' is "used" in the comment above: "isinstance(e, ValueError) used to fail"...
I agree to use the modern 'as' syntax.