It may not have a limit, but you need to understand how the server processes the includes. Includes are read first. Before anything else happens. This means that if a include takes action, it will happen before the rest of the page is parsed. So essentially what is happening is when Default.asp is loaded, include1 is loaded first, but in the process it finds that it has to load include2.....the more you step through this, the worse it will get.
If you have to multi tier things like that, it's better to do them as functions in 1 include, and call them separately. The money's gone, the brain is shot.....but the liquor we still got.