I apologize for describing this issue badly, but I'll try anyway.
The code to demonstrate the issue is attached, so it might be better to read that instead.
I noticed that when more than 10 exceptions are raised sequentially (i.e. one from another or one during the handling of another), the interpreter crashes saying "Fatal Python error: XXX block stack overflow".
This happens in python 3.7, 3.8 and development(git 39c3493) versions, but not in python2.7. Using ipython also fixes this issue.
I know this case is rare, but the maximum number of recursions is more than 2000, and the maximum number of statically nested blocks sepcified in frameobject.c is 20, so I'm pretty sure this isn't intended behavior.