Refcounting is fine...

Er, recursive reference loops are common in all sorts of designs. In pure refcounted ones, you have to use crocks like having a single object registry and having everything else have references to it, even if that is otherwise unnatural. A good few refcounted implementations (including Python and IIRC Ruby too) collect cyclic garbage just fine, by having a conventional GC as well (in Python's case, a generational GC with a variety of optimizations to take into account that most garbage is already collected by the refcounter, so most of what it will see is uncollectable).