503 errors when used with Varnish

I used the following snippet in a custom module with the redirect module.

/**
* Implementation of drupal_goto_alter()
*/
function XXXX_drupal_goto_alter(&$path, $options, $http_response_code)
{
  //If drupal_goto is asked to do a redirect (essentially via global_redirect),
  //then cache this as well (by default, it isn't, drupal_goto calls drupal_exit
  //which do not cache the result)
  if($http_response_code == 301 || $http_response_code == 302)
  {
    if ($cache = drupal_page_set_cache()) {
      drupal_serve_page_from_cache($cache);
    }
  }
}

It caused my site to completely go down in 503-error flames.

I'm attaching the Varnish log from one of the requests that resulted in an error.

We are running D7.19. Redirect 7.x-1.0-rc1. Nginx 1.2.7, MySQL, PHP 5.3.20 & memcache 3.0.7.

Once I removed this function from the custom module, everything was back to normal.