Your high school English teacher always warned you about those ambiguous pronouns, but many of the examples she gave you probably weren't really ambiguous in a practical context. Here's one that is demonstrably ambiguous, but not, I think, for the reasons usually offered in high school textbooks. Language Hat grouses about an explanation offered by Dear Abby about the distinction between "burn down" and "burn up."

DEAR ABBY: Does a house "burn up" or "burn down"? — HOT TOPIC IN ASHEBORO, N.C. DEAR "HOT": It does both, depending upon where the fire starts. According to the Beverly Hills Fire Department, if a fire starts in the attic, it burns down — and if it starts on the first floor, it burns up.

Language Hat calls them essentially synonymous in their literal meanings. In my own usage, they aren't. I strongly favor "burn down" for houses, and a Google search supports my intuition. The search on {"burn down * house"} gives 223,000 g-hits, while {"burn up * house"} gives a paltry 459. I think a number of the comments have it right when they say that "burn down" is used when we are thinking about the thing burned as being reduced in size as a result (houses, candles, etc) and "burned up" when we are thinking about the thing being consumed. But he's right that the response of the fire department is strange. That explanation simply uses "down" and "up" in their literal directional sense, not as a verb + particle idiom. (Compare "She looked up the stairs" and "She looked up his number.") Moreover, the question was about whether houses burn down or up. The answer is about fires. It makes sense, if you're a firefighter, to focus on how fires burn (i.e., where they're likely to go next), but of course that's a different perspective than most of us have on the matter, and doesn't answer the original question. In that sense, it's another case of expert perspective altering the way language is used. I'm a little surprised that Language Hat didn't notice the switch, but it is concealed by a slightly ambiguous use of the pronoun "it." If we listen to our high school English teachers, there should be no ambiguity. The nearest antecedent for "it" is "fire," and that reading makes the best sense of how "burn up" and "burn down" are used (the fire burns in a particular direction), but if we have the actual question firmly in mind, it's natural to read "it" as referring to the house, and that is apparently how Language Hat, the writers of the comments, and Dear Abby herself, since she clearly regarded the response as a legitimate answer, took the pronoun. The origin of the confusion probably comes from the fact that "burn up" is an unaccusative verb like close or land, meaning that the subject does not have to be the semantic agent (and there's no change to the passive). Compare: (1a) The pilot landed the plane. (1b) The plane landed. (2a) The wind closed the door. (2b) The door closed. (3a) The fire burned down the house. (3b) The house burned down. (3c) The fire burned down. 3b is the unaccusative alternation of 3a, and one of these two is what the original questioner had in mind. But the answer refers to 3c, which is not the unaccusative of a normal transitive verb but a separate intransitive meaning.