I noticed it when I tried to branch an xterm off into multiple sessions and mistyped its name:
So after experimenting with a ton of different scenarios I've come to this conclusion:
* both xterm and gnome-terminal crash
* a nested bash session also crashes returning me back to the previous shell where the wd is ~
* does not crash in TTY, nor in nested session within TTY.
* only happens when two or more (but not less) directories deep into home (~), for example, "~/Videos/movies/" or "~/Pictures/vacation/2009".
Running a non-existent command in the background while two or more directories deep into home (~) causes bash to crash, but only when in a terminal emulator