there is no special configs ..its normal gre source destination and ip address.
but in between, there is another GRE tunnel ( tunnel source and destination it has to cross another GRE tunnel- which is configured over LAN (fasethernet interfaces) , where the packets are dropping.
my Q is : Will a GRE over GRE work ?
Absolutely, think about what exactly is happening. So, from some source the traffic gets the original L3 protocol header. That traffic will then be encapsulated with an IP header at the first GRE tunnel, putting an IP source and IP destination. That traffic would then begin to travel and could potentially need to traverse another GRE tunnel. So, the now IP packet would again be encapsulated with a new IP header and sent to the tunnel destination of GRE tunnel 2. Once it arrives, the second IP header that was added would be removed and be routed to the first header destination. Once arriving there, that header would be removed and the original datagram would be forwarded accordingly.
I guess one question to ask is what kind of traffic are you encapsulating at the first GRE tunnel? Is it IP? or something else?