(5.8 sounds interesting from the time frame. Will check this tomorrow & update this reply node. thx!)

OK/fail*: just setting PERL_SIGNALS=unsafe in the shell indeed does the trick, however this affects the whole program, even if it makes the original program work again.

FAIL: there are low level readline lib variables with interesting names e.g. in Term::ReadLine::Gnu: _rl_vars{rl_catch_signals}=['C',20]; however these reliably fail for me as I'm too lazy to actually read both the library and XS to make sense of them :/.

FAIL: there were some related pointers via google that PERLIO=perlio instead of stdio solves some recent trouble with 5.10 with IO. Changing the environment variable alone is insufficient. And readline might well do it's own IO in parallel to perlio!?

probably OK and localized: Perl::Unsafe::Signals

OK/fail* and localized: POSIX::sigaction, see search.cpan.org/~dapm/perl-5.10.1/pod/perlrun.pod#PERL_SIGNALS and search.cpan.org/~dapm/perl-5.10.1/pod/perlipc.pod#Deferred_Signals_(Safe_Signals) (sorry, the shortcut perlipc and perlrun docs are different, incomplete versions; thus the cpan links instead).

*) "fail" as I cannot see a way to get the partial line on ALARM. For both POSIX::sigaction and also PERL_SIGNALS=unsafe, the original way to access it seems broken.