A. It is not valid HTML nor XHTML
In the official W3C XHTML specification, Section B. "Element Prohibitions", states that:
"form must not contain other form elements."
http://www.w3.org/TR/xhtml1/#prohibitions
As for the older HTML 3.2 spec,
the section on the FORMS element states that:
"Every form must be enclosed within a
FORM element. There can be several
forms in a single document, but the
FORM element can't be nested."
B. The Workaround
However, someone has already attempted that at:
"How to create a nested form."
http://blog.avirtualhome.com/2008/10/01/how-to-create-a-nested-form/
Note: Although one can trick the W3C Validators to pass a page by manipulating the DOM via scripting, it's still not legal HTML. The problem with using such approaches is that the behavior of your code is now not guaranteed across browsers. (since it's not standard)