"He thought that that might be awkward."
I know this sentence is a bit awkward, but is it grammatically incorrect?
"He thought that that might be awkward."
I know this sentence is a bit awkward, but is it grammatically incorrect?
It may sound awkward, but it is grammatically correct.
The answers to this question exhibit more awkward ones: Awkward sounding but grammatically correct sentences?
There's nothing wrong, IMO, with re-wording the sentence if you feel it sounds awkward. For example (with a context I provide):
"Jim thought reprimanding her would be appropriate. Bill, on the other hand, thought it might be awkward." (The indefinite pronoun "it" replaces "reprimanding her.")