It's probably best shown by example:

http://ideone.com/4YkqV

Have fun! This one looks hard.

Some notes: Exchanging g2() for iter([1]) makes this go away. Wrapping g2 inside a non-generator iterator does not make this go away. 

Removing the call to next(it) after it = g2() makes the problem go away, as does replacing those two lines with next(g2()).

The file used in that ideone paste is attached for your convenience.

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Debugging is impractical for me with this bug in existence. It never stopped printing the traceback before I killed the process. (And let's forget about debug prints!)