Hmm, running with max-nodes=300000 on r65 now makes it further, but fails with another (related) problem. I'm going to try and find the problematic way(s)/relation(s) so I can make a test case. Please hold off on big splits with r65 for now.
Have a try with splitter r65, I've just checked in a fix that should solve your problem. I reran it against today's europe.osm and it completed successfully:
.. 12,000,000 ways processed... Writing relations Sun Aug 09 14:19:27 BST 2009 50,000 relations processed... 100,000 relations processed... Wrote 118,698,421 nodes, 12,124,642 ways, 110,327 relations Time finished: Sun Aug 09 14:19:34 BST 2009 Total time taken: 1836s (I forgot to set --max-nodes=300000 to make it a fair comparison with your run, however I'm rerunning it with 300000 right now just to be absolutely sure the problem is fixed)
Chris