I can't reproduce this with the latest bzr version, so I'm guessing it has been fixed.
I do see the error with bzr 1.3. However, I don't believe it is because of the nested branch, but instead because you've never done "bzr commit" in either branch (so there are no committed revisions.)
There have been a few patches recently which effect export code, the specific error here doesn't happen with bzr.dev, so should be fixed in bzr1.7
I can't reproduce this with the latest bzr version, so I'm guessing it has been fixed.
I do see the error with bzr 1.3. However, I don't believe it is because of the nested branch, but instead because you've never done "bzr commit" in either branch (so there are no committed revisions.)
There have been a few patches recently which effect export code, the specific error here doesn't happen with bzr.dev, so should be fixed in bzr1.7