My attention has been drawn to the second paragraph of the aliases section of the help file which states that recursion is not supported because it "causes more problems for users that it solves". I can only make guesses as to what this implies but it sounds like scripters are too incompetent to know what they're doing. On the contrary, I can state that without recursion it causes me the problem that my scripting problem can't be solved. To me that's more serious than the possibility of an infinite loop and subsequently the possibility of wasted memory or whatever else.
It has also been bought to my attention that it is possible to workaround this deliberate limitation using various methods as long as you're happy to call an alias as a command and not an identifier. Since it is possible to implement recursion despite having to write ugly code and because I feel that being able to write recursive functions is a necessity I sincerely hope that this limitation can be lifted in time for the next version of mIRC.