This problem happens with latest cvs vte in gnome-2-2 branch
It only affects a single window, the process itself is still usable.

This happens when vte gets a lot of input data at once so that the ring
buffer gets full.

The glib callback for the io channel calls vte to process the input forever.

There is a warning message on the console (Error reading from child: Bad
address). I debugged this one and found that in the following lines:

(line 7320 in src/vte.c)

   if (condition & G_IO_IN) {
      bcount = sizeof(buf) -
	  _vte_buffer_length(terminal->pvt->incoming);
      bcount = read(fd, buf, MAX(bcount, sizeof(buf) / 2));
   }

read is called with -1 as third argument (the length) and read returns an
EFAULT.