In one of the tip pages Ben Powell wrote here he said the following:
I would presume that this mostly happens if you use more sequestrant than there is metal to sequester so it starts to sequester more calcium and this apparently diffracts/reflects light in a way that makes the water look cloudy.A small overdose of the most popular stain and scale control chemical ingredient, HEDP, will precipitate unfilterable colloidal calcium phosphonate. In English, your pool will look like milk till you drain it.
Since we haven't heard many reports of this, I wonder how much overdosing is required. I also wonder if one can fix this problem via any sort of clarifier or flocculant (I somewhat doubt it) or if ironically one can add more metals to the pool (such as copper) to tie up the sequestrant. Of course, dilution via partial drain/refill would work.