Maybe the following isnt allowed by the spec (I have looked and havent ben able to find it is that is so), but I am trying to @Embed an objet inside and @Embeddable.

The end result is a StackOVerflowException when trying to create the schema ...

I am using Hibernate annotations 3.1 beta 4, and the most recent Hibernate release comaptible with Hibernate annotations, but not the entity manager.

This is doable and part of the unit test suite.
Of course an embeddable object A embedding an embaddable object B which embedded the first one (A) is not possible since a circular reference occurs.
Show your code to disambiguate the issue.

Humm the code that exhibits this is a bit convoluted .. I will try to cimplify it and post it afterward.