Replace the stack based virtual machine with a register based machine. This would be a fairly large project but could likely be mostly completed in a summer. The resulting performance increase would be around 10%.
Maybe it would be more interesting to work on the Parrot side of things, which is also a register based VM, but will include support for other languages than Python (allowing for cool things like exchanging objects/functionality in Perl, Python and PHP).
There's been a recent discussion on register-based approaches.