The LABEL search algorithm seems to fail when invoked in a signal handling context

Ah, that's very good information to have.

That idea was hackish enough for me that I've never actually tried to use it. Thanks for testing it.

Here's a crazy idea I'd never use myself, either:

{
    package Medusa; # Fatal to look at
    use Carp 'croak';
    use overload( '""' => sub { die $_[0] } );
    sub new { my $self = 0; return bless \$self; }
}
my $timed_out = 0;
eval {
    local $SIG{ALRM} = sub {
        warn "Time's up!\n";
        die Medusa->new();
    };
    alarm( $seconds );
    do_work();
    alarm( 0 );
    1;
} or do {
    alarm( 0 );
    die $@
        if  "Medusa" ne ref($@);
    $@ = '';
    $timed_out = 1;
};
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It works when tested on:

sub do_work {
    eval {
        eval {
            my $word = $ENV{WORD} || 'a';
            $word++ while $word ne 'interrupt';
            warn "Got: $word\n";
        };
        if( $@ ) {
            warn "Ignoring failure.\n";
        }
        1
    } or do {
        my $e = $@ || 'Unknown error';
        warn "Failed: $e\n";
    };
}
my $seconds = 2;
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But that isn't a guarantee that every 'eval' will try to look at $@ after it fails. :)