No, it's not that far from the worst offense. The hardest code I have ever had to read has always been code with ten+ levels of nesting in a big function, where I had to keep a big mental stack of what was necessarily true to be in the branch I was looking at. There is no situation on Earth where four levels of nesting couldn't be broken up into something more understandable; the only reason not to might be for the purposes of microoptimization.

As far as I know, the only worse offenses to readability are jumps or formatting your program like an IOCCC entry.

Do you actually disagree, or are you just going on? If the former, then please give an example of the right "circumstances."