we can cut contours by polygon but sigsegv is result 
here is some debug
GRASS 7.0.svn (ncontours_magic):~/grassgis/grass-svn > gdb v.overlay
GNU gdb (GDB) 7.4.1-debian
Copyright (C) 2012 Free Software Foundation, Inc.
License GPLv3+: GNU GPL version 3 or later <http://gnu.org/licenses/gpl.html>
This is free software: you are free to change and redistribute it.
There is NO WARRANTY, to the extent permitted by law. Type "show copying"
and "show warranty" for details.
This GDB was configured as "x86_64-linux-gnu".
For bug reporting instructions, please see:
<http://www.gnu.org/software/gdb/bugs/>\.\.\.
Reading symbols from /usr/local/grass-7.0.svn/bin/v.overlay...done.
(gdb) run ainput=cnt_sm atype=line binput=orez output=cnt_cut_test operator=and --verbose --overwrite
Starting program: /usr/local/grass-7.0.svn/bin/v.overlay ainput=cnt_sm atype=line binput=orez output=cnt_cut_test operator=and --verbose --overwrite
[Thread debugging using libthread_db enabled]
Using host libthread_db library "/lib/x86_64-linux-gnu/libthread_db.so.1".
WARNING: Vector map <cnt_cut_test> already exists and will be overwritten
Copying vector features from <cnt_sm@miro>...
100%
Collecting input attributes...
Copying vector features from <orez@miro>...
100%
Collecting input attributes...
Breaking lines...
26%
Program received signal SIGSEGV, Segmentation fault.
0x00007ffff7b7e4b9 in break_lines (Map=0x7fffffffc020, List_break=0x0, List_ref=0x61ec60, type=6, Err=0x0, check=0) at break_lines.c:356
356 !touch1_e && nodex == BBox->W) ||
(gdb) info local
APoints = 0x4df2a20
BPoints = 0x4df2a50
Points = 0x4df2a80
AXLines = 0x0
BXLines = 0x0
ACats = 0x4df2ab0
BCats = 0x4df2ad0
Cats = 0x4df2af0
i = 0
j = -1
k = 32767
l = -20720
ret = -138628762
atype = 4
btype = 4
aline = 136717
bline = 136717
found = 0
iline = 128
nlines = 461
nlines_org = 137049
naxlines = 0
nbxlines = 0
nx = 0
xx = 0x0
yx = 0x0
zx = 0x0
ABox = {N = 5546310, S = 5414331, E = 399947.40000000002, W = 300473.40000000002, T = 0, B = 0}
BBox = 0x7fffe6f49fe0
List = 0x4df2b10
nbreaks = 0
touch1_n = 1
touch1_s = 1
touch1_e = 0
touch1_w = 1
touch2_n = 0
touch2_s = 1
touch2_e = 1
touch2_w = 1
is3d = 0
node = 136740
anode1 = 136740
anode2 = 136626
bnode1 = 136740
bnode2 = 136626
nodex = 399947.40000000002
nodey = 5414331
a_is_ref = 1
b_is_ref = 1
break_a = 1
break_b = 0