The recipes I've seen have an inner eval block and a second alarm(0). Paraphrasing, the inner eval is to trap any exception from your long process, which otherwise might pop you out of the outer eval with the alarm still pending; and the second alarm reset is for the slim chance of an exception occurring after the inner eval, but before the first alarm reset.
See the three new lines below. I haven't tested this, but does it work?
use strict;
use warnings;
use XML::LibXML;
my $html = do { local $/; <> };
my $libxml = XML::LibXML->new();
#$libxml->recover(2);
eval {
local $SIG{ALRM} = sub { die "TIMEOUT\n" };
alarm(10);
eval { ######
$libxml->parse_html_string($html);
}; ######
alarm(0);
};
alarm(0); ######
if ($@ and $@ eq "TIMEOUT\n") {
warn "Timed out ok.\n";
} elsif ($@) {
die $@;
}