Orthodoxy and Limbo
For some time, reports have suggested Pope Benedict XVI is about to jettison the medieval "theological hypothesis" (his term) known as Limbo. (This BBC item also reports the underappreciated fact that this began with Pope John Paul II.) An interesting discussion broke out on York Forum and another on Ely Forum concerning Pope Benedict XVI's decision to have Roman Catholic theologians draw up a report that could abandon the RCC teaching that unbaptized babies go to "Limbo" upon death.
(What is Limbo? A place that is not Heaven, nor Hell, nor Purgatory. "Aquinas taught that limbo is a place of perfect natural happiness, but without the supernatural vision of God (the 'beatific vision'), to which no creature has a natural right." Clear everything up?)
The longstanding RCC belief in Limbo follows from the premise that babies are infected with "Original Sin" (the guilt of sin), which is only washed away in the waters of baptism.  Although babies committed no actual sins, they inherited Original Sin and thus, according to this theology, could not be granted the joys of Heaven. Neither had they earned Hell; here beginneth Limbo. Despite the supposedly pervasive influence of extreme scholasticism throughout the West, generations of Latin theologians knew nothing of Limbo.
In my quite fallible, far-from-perfect view, I find the concept of Limbo outside Orthodox theology: the wrong answer to the wrong question. Since Orthodox do not believe in original "guilt"  but rather they men are born with an inborn predisposition to sin, there seems no more need for Limbo than there is a need for the belief in the Blessed Virgin's Mary's Immaculate Conception to produce a perfect Christ. 
At a minimum, most Orthodox hold out the firm — and comforting — possibility that unbaptized babies go to Heaven; many state categorically that babies who die without baptism attain salvation. Russian Orthodox Bishop HILARION (Alfeyev) weighed in on the subject, writing tersely that the historical Orthodox teaching on unbaptized babies "is opposite to the teaching of Thomas Aquinas." The Orthodox Office of Prayer and Supplication for the Victims of Abortion, prayed by H.G. Bp. BASIL, for instance, implores God, "[W]e humbly pray, according to Thy unfailing promise: grant the inheritance of Thy kingdom to the multitude of spotless infants who have been cruelly murdered."
This salvation is possible due to the Orthodox understanding of salvation. Pseudo-Dionysius — whose works are important for all historical churches — taught that God bursts forth in an endless stream of "rays" or "processions" (dynamis) toward His creation, and that each man responds to the degree he is able. The author played on the contrasting images of God's descent toward man, and man's ascent (or rather, assent) in return. Could it not be these children had such faith as they were capable of possessing, preserved their innocence, and went to Heaven?
St. Irenaeus of Lyons wrote in his seminal (surviving) work, Against Heresies:
And as the presbyters say, Then those who are deemed worthy of an abode in heaven shall go there, others shall enjoy the delights of paradise, and others shall possess the splendour of the city; for everywhere the Saviour shall be seen according as they who see Him shall be worthy. [They say, moreover], that there is this distinction between the habitation of those who produce an hundred-fold, and that of those who produce sixty-fold, and that of those who produce thirty-fold: for the first will be taken up into the heavens, the second will dwell in paradise, the last will inhabit the city; and that was on this account the Lord declared, "In My Father's house are many mansions." For all things belong to God, who supplies all with a suitable dwelling-place; even as His Word says, that a share is allotted to all by the Father, according as each person is or shall be worthy. (Book 5: Chapter 36: Paragraphs 1-2.)St. Gregory of Nyssa wrote in his treatise, "On Infants' Early Deaths" that since "the innocent babe has no such plague before its soul's eyes obscuring its measure of light, and so it continues to exist in that natural life; it does not need the soundness which comes from purgation, because it never admitted the plague into its soul at all." St. Gregory wrote that humans are nurtured first by milk, then by solid food in both the earthly and the heavenly life. Since infants have never contended for virtue as adults must,  they "partake only so far in that life beyond (which consists, according to our previous definition, in the knowing and being in God) as this nursling can receive; until the time comes that it has thriven on the contemplation of the truly Existent as on a congenial diet, and, becoming capable of receiving more, takes at will more from that abundant supply of the truly Existent which is offered." Thus, he says the infant begins at the level upon which he/she has experienced and responded to God (a low level, to be sure) but holds out the promise of eternal advancement — or as the Western Rite Liturgy of St. Tikhon says, "continual growth in Thy love and service."
Yet it is precisely this eternal growth in grace that the doctrine of Limbo rejects.
The idea that infants, and even the unborn, have some form of communion with God startles the modern imagination, so bathed in empiracism. However, this concept was grasped by an unlikely source: Martin Luther.  Luther answered a common Anabaptist objection to paedo-baptism, writing:
The children themselves believe...and have their own faith which God works within them — through the faithful intercession of their parents who faithfully bring them to the Christian Church...Through their [parental] intercession and assistances, the children receive their own faith from God.This is significant, as A Catholic Dictionary defines "the limbo of children" as a place for "all, children and adults, who leave this world without baptism of water, blood, or desire." Who can prove a child lacks the baptism of desire? 
I have even heard a traditionalist RCC priest say the Holy Innocents prove unbaptized babies attain salvation. It is possible some were not yet seven days old and, hence, uncircumcised (the Old Covenant sacrament of initiation, which St. Paul likens to baptism).
The RCC has moved away from the (again, in my far-from-perfect opinion) monstrous belief in Limbo. The (1992) Catechism of the [Roman] Catholic Church now states:
As regards children who have died without Baptism, the Church can only entrust them to the mercy of God, as she does in her funeral rites for them. Indeed, the great mercy of God who desires that all men should be saved, and Jesus' tenderness toward children which caused him to say: "Let the children come to me, do not hinder them," allow us to hope that there is a way of salvation for children who have died without Baptism.I'm happy to report that in October, a member of Pope Benedict XVI's commission predicted the belief in Limbo would be deemed "neither essential nor necessary," and the commission would recommend against its continued use.
Apparently, the current pope had a negative view of Limbo before his pontificate. His pressing forward with this recommendation will eliminate one more stumbling block to reconciliation with the East, a passion of his (and his predecessor). More importantly, I pray it will more perfectly reflect God's nature as a loving and compassionate Father. Standing with the Orthodox Church, I believe God, Who is love, is more inclined to embrace the youngest, most innocent, most helpless of His children in His eternal embrace than to cast them into a place of nothingness where they shall be eternally denied a glance of His countenance.
1. This medieval RCC teaching is somewhat mitigated in the current catechism.
2. With apologies to some of my friends, and despite occasional references here-and-there, Orthodoxy has not accepted this view as part of its normative/prevailing self-definition, either now or to my knowledge in history.
3. Yes, I'm aware many Orthodox believe in this as a theologoumenon, while most have rejected it since its promulgation as a Roman Catholic doctrine.
4. This is a vital concept in the Church Fathers. The Greek mind more readily understood man's spiritual than his physical nature, the exact inverse of modern man. Thus, the classical Greeks inquired why man had to be saddled with a body of flesh, impressing its disordered passions upon the soul. St. Gregory of Nazianzus/the Theologian repeatedly writes that man was given flesh that he might strive to overcome and subdue the passions, strengthening himself in virtue. This makes man more worthy of reward than the angels, who do not "wrestle with flesh and blood," as it were.
5. Martin Luther, in his disputation with the Anabaptists, also taught, "If faith remains with the sleeping Christian while his reason is not conscious of the faith — why should there not be faith in children, before reason is aware of it?"
6. The Raymond Touk article is a good overview, although it claims in the second paragraph, "[F]or infants, baptism is the sole means of salvation, (as they cannot make an act of faith, which requires the use of reason)."
Update: I see the Pontificator has posted a series of detailed articles on this topic, taking a similar position. They're worth reading. Begin here and "continue" at the end of each article.