Hmmmm... this is an interesting concept... onew I've never heard anyone consider. I presume, your intentions are to use the console connection to configure each 3550 to put all its ports in the same VLAN as the connecting port on the next device. If you do that to all the devices that are interconnected, you've essentially created a single, flat, layer 2 broadcast domain. Will you also put them in the same VTP domain? In a sense, you are creating a stackable switch.
Have you ever looked at the 2900 and 3500 series of Cisco's XL switches. They have code that support "clustering", which is another means for emulating a stackable switch. With the clustering features, one can "stack" interconnected switches (they do not have to be in a ring, they can be in a star, daisy chain or combination patterns). One of the devices will be the cluster manager, placing the others in member roles. When some configuration features are changed (i.e. password changes), all you have to do is update the manager and the members get updated. Even code upgrades are handled in the same manner.
Now, to answer your question, I see no reason why you cannot do what you are asking, however, I would question why someone would do that. What if you need to log into one of the devices that does not have an IP for any reason? Instead of having telnet access you'd have to physically connect to the device through its console port. Unless they are in close proximity of each other, such as a lab environment, I would not recommend it.
