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Compiling
s=[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]]
gives an error message
s_push: parser stack overflow
Python 1.5.2 then reports a MemoryError, 2.0b2 a SyntaxError.

What is the desired outcome here? Python is reporting a SyntaxError; it's not crashing. Would you like to increase the max stack size for the parser? What should it's limit be?
The current parser stack limit allows eval("["*x+"]"*x) for values of x up to and including 35. I'm not sure why the limit is set this low. I bumped the value of MAXSTACK in parser.c from 500 to 5000 and it accepted the nest list expression for values of x up to 357.

It was confusing that Python would produce a SyntaxError for an obviously-correct script, and that such a small limit was found in the parser.
Since the limit is not due to recursion on the C stack: Would a patch removing this limitation be accepted (certainly not for 2.0). The two alternatives I see are to make the array completely dynamic, or to allocate a dynamic array in the stack if the static one overflows.

There is a limit that is based on the C stack, because the parser is recursive descent. If I set the max stack size to 100000, I get a seg fault.
I'm not sure if a patch for this would be accepted post 2.0 or not; I'll talk to Guido and see what he thinks.
I think we could safely increase the static limit before 2.0, though I'm not 100% certain. What nesting level did your application come up with?
I would guess that max stack == 10000 (700 nested lists) should be safe on all reasonable platforms and much more useful.

BTW, JPython gets to 133 nestings (on my RH6.1 system) before a java.lang.StackOverflow gets thrown.
Ever heard the old joke "Doctor, it hurts when I do this?" ... 

The problem was found when printing an expression like parser.suite("3*4").tolist(),
then modifying the string, and feeding the outcome back to Python. It is not a serious problem that this works for every possible Python code - it is just confusing to get a SyntaxError when there is no syntax error in the input.
BTW, I believe the parser is *not* recursive on the C stack; I could not find any sign of recursion inside Parser/parser.c. Most likely, the crash you got when increasing the parser stack size comes from Python/compile.c; the com_* functions are recursive on the C stack. It would be possible to remove the recursion here as well (using an explicit stack that lives on the heap); that would require a larger rewrite of compile.c, though.

The SyntaxError is actually caused by a bug in the parser code! When s_push() reports a stack overflow it returns -1, which is passed through unchanged by push() -- but the code that calls it only checks for positive error codes! I've fixed this by returning E_NOMEM from s_push() instead.
The only downside I see of making MAXSTACK larger is that a stack of maximal size is allocated each time the parser is invoked. With MAXSTACK=500 on a 32-bit machine, that's 6K. Switch to 5000 and it's 60K. No big deal except perhaps for ports to PalmPilots and the like...
Note that with MAXSTACK=500, you can "only" have 35 nested lists.

Guido fixed the bug part. Defer any other changes to post 2.0.
Added to PEP 42.

Well, I've been a victim of this one yesterday in a real world example.
I'm logging the repr of arguments to XMLRPC method calls and we happen
to use nested lists, which where deep enough to overflow that stack.
It's now 8 years later and I can live with the parser using 60K memory.
I think this limit should be upped a bit.

Ofcouse the problem was not logging, but I wanted to "replay" those
commands. This is where I got the error.

Fine, submit a patch. Might as well open a new bug for the patch
(referring to this one for background).

Ok, I've upped the limit to some very high value and tried to provoke a
stack overflow.
eval("["*x+"]"*x) segfaults on my machine for x somewhere around 20000
(linux, amd64). When setting MAXSTACK to 5000 eval("["*x+"]"*x) works
for x <= 333. So, I guess this should be safe guess (even for the BSDs,
which have a smaller default stack size).
BTW: The hardest part was recognizing that nothing gets rebuilt and that
more then parser.o depended on parser.h. Don't you have some kind of
automatic dependency tracking? Or am I missing some build tools?
Anyway, patch in http://bugs.python.org/issue1881 

Parser/parser.h was not in the list of dependencies. I fixed it in r60151