I test the following code:
for i in range(3):
for i in range(3,5):
print \"inner i: %d\"%(i)
print \"outer i: %d\"%(i)
and
There's only one i, not two. When the inner loop is entered, it changes i, and keeps changing it until the inner loop exits. The next iteration of the outer loop then sets i to the next value in its range, but you never see it because you immediately enter the inner loop once more, again changing i.
This is of course very bad practice. You should never modify the variable in a for loop while that loop is active.