My patch works for your example too.  Since it checks for loops in __context__ setter, you shouldn't be able to create complicated loops. However, since PyException_SetContext and PyException_SetCause are public APIs, and their return type is 'void', I can't raise an error when a C code introduces a cycle, in that case, the exc->cause/exc->context will be set to NULL.(I came to this bug via the ExitStack + subprocess issue27122 which merely has a suggested workaround patch as a band aid that might help until this is fixed) 
Thanks: http://driverwhiz.com/device-drivers