I have installed Term::Readline::Perl; btw did not find any existing bug reports similar to what I have. Adding term => q[dumb] to MyConfig.pm does not help. Setting term_ornaments => q[0] returns visibility to a cpan shell, but only export TERM=dumb fixes the issue for both cpan and perl debugger.
If anyone is interested, setting $ENV{TERM} = q[dumb]; in CPAN/MyConfig.pm and in /System/Library/Perl/5.18/perl5db.pl (need sudo here) restores expected behavior to both cpan and debugger shells. I lost readline/history functionality but that is less important. Thanks again!