I can imagine any number of uses for an infinite iterator. Like, what about a program iterating through status messages being sent by another server or a background process. While in real life the server will presumably stop eventually, from the program's point of view it might just keep reading until it is stopped by something unrelated to the iterator reaching its end.
It would certainly be unusual and, as others have said, should be carefully documented. But I wouldn't declare it unacceptable.
