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 [[http://tinyurl.com/register-interp|discussion on register-based approaches]].