Leo: It seems that in this case everyone knows that everyone knows [...] that there is "at least one person with blue eyes".

I've not actually read this thread, nor the Wikipedia page, because I like this sort of puzzle, and thought it would be fun to think about this. Here's what I came up with:

If there are three people on an island, all of whom have blue eyes, but none of whom know their own eye colour, then:

Alice might believe that Alice has brown eyes...

Therefore, she might believe that Bob believes that both Alice and Bob have brown eyes...

Therefore, she might believe that Bob believes that Carol believes that everyone's eyes are brown.