Okay, I did a simple rewrite using my Alarm::Concurrent module. You can add ':OVERRIDE' just after 'setalarm' in the use line (line # 3) to have it take over $SIG{ALRM} if you like.

Let me know what you think. :-)

#!/usr/bin/perl -w

use Alarm::Concurrent qw( setalarm );

my $TIMELEVEL = 0;
sub timeout(&;$) {
  my $code = shift;
  my $time = shift || 30;

  my $dietext = "Timeout " . ++$TIMELEVEL . "\n";

  eval {
    local $SIG{__DIE__};
    setalarm($time, sub { die $dietext });
    $code->();
  };

  --$TIMELEVEL;

  if($@ eq $dietext) {
    return 0; # Timed out.
  } elsif($@ ne '') {
    die $@; # Propagate error upstream.
  }

  return 1; # Everything's ok.
}

timeout {
  timeout {
    sleep 10;
  } 3 or die "Inner timeout";
} 2 or die "Outter timeout";

print "Everything's ok.\n";
[download]

And the output is:

Outter timeout at ./testtimeout line 33.

bbfu
Seasons don't fear The Reaper.
Nor do the wind, the sun, and the rain.
We can be like they are.