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I've been able to replicate the problem reliably on both 10.3.5 and 
10.3.7. I've attached two more examples to demonstrate:

Try this: Do, "dd if=/dev/zero of=./data bs=1024 count=10240" and save 
server.pl wherever you put "data". Have three terminals open. In one, 
run "perl server.pl -s0.25". In another, run "top -ovsize" and in the third 
run "python example2.py". 

After about 100 iterations, python's vsize is +1GB (just about the value 
of cumulative_req in example2.py) and if left running will cause a 
malloc error at around 360 iterations with a vsize over 3.6GB (again, just 
about what cumulative_req reports). Mind you, we've only received 
~512kbytes.

server.pl differs from the netcat method in that it (defaults) to sending 
only 1492 bytes at a time (configurable with the -b switch) and sleeps for 
however many seconds specified with the -s switch. This guarantees 
enough iterations to raise the error each time around. When omittting 
the -s switch to server.pl, I don't get the error, but throughput is good 
enough that the loop in readFromSockUntil() only runs a few times.