Comment 22 for bug 171117

Here's a patch to inkex.py that adds the XML_PARSE_HUGE option to extensions, allowing the Deep Ungroup to work on deeply nested groups (and also the Color Replace, and actually every extension). I just put my modified inkex.py in my personal extensions folder, which works. Patch is against 0.48.4.

With this and Matej's "Deep Ungroup" extension (see previous comment), we have a working solution for the OP. Though, I admit, a cleaner solution would have been to extend the inkex.py to accept a "huge" option argument and allow the extensions to turn it on as needed, instead of just applying XML_PARSE_HUGE to all of them unilaterally.