Python file parsing: Build tree from text file

If you don't insist on recursion, this works too:

from itertools import takewhile

is_tab = '\t'.__eq__

def build_tree(lines):
    lines = iter(lines)
    stack = []
    for line in lines:
        indent = len(list(takewhile(is_tab, line)))
        stack[indent:] = [line.lstrip()]
        print stack

source = '''ROOT
\tNode1
\t\tNode2
\t\t\tNode3
\t\t\t\tNode4
\tNode5
\tNode6'''

build_tree(source.split('\n'))

Result:

['ROOT']
['ROOT', 'Node1']
['ROOT', 'Node1', 'Node2']
['ROOT', 'Node1', 'Node2', 'Node3']
['ROOT', 'Node1', 'Node2', 'Node3', 'Node4']
['ROOT', 'Node5']
['ROOT', 'Node6']

The big issue is the "lookahead" that I think caused the ugliness in question. It can be shortened slightly:

def _recurse_tree(parent, depth, source):
    last_line = source.readline().rstrip()
    while last_line:
        tabs = last_line.count('\t')
        if tabs < depth:
            break
        node = last_line.strip()
        if tabs >= depth:
            if parent is not None:
                print "%s: %s" %(parent, node)
            last_line = _recurse_tree(node, tabs+1, source)
    return last_line

inFile = open("test.txt")
_recurse_tree(None, 0, inFile)

Since we're talking recursion, I took pains to avoid any global variables (source and last_line). It would be more pythonic to make them members on some parser object.