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Going to take a stab in the dark - the the issue lies here:
"./Python/errors.c"
#ifndef Py_NORMALIZE_RECURSION_LIMIT
#define Py_NORMALIZE_RECURSION_LIMIT 32
#endif
As there is not enough memory for this to run in the default memory model.
However, 32 does not seem to be a counter limit:
With this "hack" I get success:
 script = """if True:
 import threading
 def recurse(loop=0):
 loop = loop+1
 if loop < 128+32+8+3:
 return recurse(loop)
 else:
 return
 def outer():
 try:
 recurse()
 except RecursionError:
 pass
 w = threading.Thread(target=outer)
 w.start()
 w.join()
 print('end of main thread')
 """
So, I hope this helps point at where we need to look to find why RecursionError is not being returned when (I assume) memory runs out.