Charlie Nutter found an issue in C1 and filed a JRuby bug for it:

http://jira.codehaus.org/browse/JRUBY-6920

The reduced test case is:

10000.times do
  begin
    ENV[1]
    raise
  rescue TypeError
  end
end

$ jruby -J-showversion -J-d32 -J-client -J-Xbatch JRUBY-6920.rb
java version "1.8.0-ea"
Java(TM) SE Runtime Environment (build 1.8.0-ea-b60)
Java HotSpot(TM) Client VM (build 25.0-b04, mixed mode)

RuntimeError: No current exception
  (root) at JRUBY-6920.rb:4
   times at org/jruby/RubyFixnum.java:273
  (root) at JRUBY-6920.rb:1