On Windows, I get an indefinite hang rather than an overt crash with a crash box.  I believe that there was some swapping out to disk.  I got the same with list(itertools.count()). 

If you got a core dump or crash report, you might upload it.  

There is infinite looping in the argument collection but no infinite recursion (calling) here.  The latter is detected pretty quickly because of sys.recursion limit.  Infinite loops by themselves are not necessarily wrong.  This typing box is run by an infinite loop.  Change your 'use' to

def use(iter):
    for i in iter: print(i)

and there would be no problem.  So I disagree with 'should have been detected'.  I am only leaving this open in case you got an overt crash for this particular loop.  Those we try to fix.