This changes variable expansion so that it is recursive

tests/test1/test1.gyp

+# This is a simple test file to make sure that variable substitution
+# happens correctly.  Run "run_tests.py" using python to generate the
+# output from this gyp file.
+
+{
+  'variables': {
+    'pi': 'import math; print math.pi',
+    'letters': 'ABCD',
+  },
+  'targets': [
+    {
+      'target_name': 'foo',
+      'type': 'none',
+      'variables': {
+        'var1': '<!(["python", "-c", "<(pi)"])',
+        'var2': '<!(python -c "print \'<!(python -c "<(pi)") <(letters)\'")',
+        'var3': '<!(python -c "print \'<(letters)\'")',
+        'var4': '<(<!(python -c "print \'letters\'"))',
+      },
+      'actions': [
+        {
+          'action_name': 'test_action',
+          'inputs' : [
+            '<(var2)',
+          ],
+          'outputs': [
+            '<(var4)',
+          ],
+          'action': [
+            'echo',
+            '<(_inputs)',
+            '<(_outputs)',
+          ],
+        },
+      ],
+    },
+  ],
+}