"recursive rules" vs "recursive terms"

Can the problem Gary labeled "recursion" be narrowed to only be talking
about recursive generation of terms?  Recursive references between
predicates are not a problem in production rules -- it's just when they
start building larger terms or new terms (ala gensym or math builtins)
that the engine gets in a loop, right?  (I'm sure there's a better way
to characterize this kind of rule, but I can't remember a term for it.
I'm just realizing that the label "recursive" cuts off much more of the
space than is necessary.)

       -- Sandro