MIT's Moira system, which was in use for user and group management
before we had AFS (and still is), has supported recursive groups with
no restrictions for as long as I can remember (5+ years).  I don't
know of any case where someone added a group administrated by someone
else to a group they administrated and got really confused.  The only
exception I can think of is when group x was added to group y instead
of vice versa, and this mistake is usually fixed rather quickly when
it happens, which is rarely.

So, although you have a valid concern, my experience from real users
(many of whom are far from experienced) is that it's not a problem.

I'm also a firm believer in giving the user enough rope to hang
himself, since otherwise, you *will* restrict clever people from doing
clever things.

                Marc

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