Using Scala continuations with while loops

I realize this is counter to the usual sense of SO questions, but the following code works even though I think it should not work. Below is a small Scala program that uses continuations with a while loop. According to my understanding of continuation passing style, this code should produce a stack overflow error by adding a frame to the stack for each iteration of the while loop. However, it works just fine.

import util.continuations.{shift, reset}


class InfiniteCounter extends Iterator[Int] {
    var count = 0
    var callback: Unit=>Unit = null
    reset {
        while (true) {
            shift {f: (Unit=>Unit) =>
                callback = f
            }
            count += 1
        }

    }

    def hasNext: Boolean = true

    def next(): Int = {
        callback()
        count
    }
}

object Experiment3 {

    def main(args: Array[String]) {
        val counter = new InfiniteCounter()
        println(counter.next())
        println("Hello")
        println(counter.next())
        for (i <- 0 until 100000000) {
            counter.next()
        }
        println(counter.next())
    }

}

The output is:

1
Hello
2
100000003

My question is: why is there no stack overflow? Is the Scala compiler doing tail call optimization (which I thought it couldn't do with continuations) or is there some other thing going on?

(This experiment is on github along with the sbt configuration needed to run it: https://github.com/jcrudy/scala-continuation-experiments. See commit 7cec9befcf58820b925bb222bc25f2a48cbec4a6)