If you aren't interested in the gory details of sockets, Net::Telnet might be interesting for you.

Here's an example that does what I think you want. It doesn't read character by character, but it does print output as it reaches the buffer, rather than waiting for a newline:

#!/usr/bin/perl
# unbuffer STDOUT, so you can watch the
# traceroute output "realtime"
select STDOUT;$|=1;
use Net::Telnet;
my($host)="yourhost";
my($trace)="www.cnn.com";
my($username)="username";
my($passwd)="password";
my($t)=Net::Telnet->new(Host => $host);
defined($t) or die;
$t->login($username, $passwd) or die;
$t->print("traceroute $trace") or die;
while (defined($data = $t->get())) {
    print $data;
    # supposing your prompt is a dollar
    # sign and that doesn't ever appear in 
    # traceroute output...
    last if ($data =~ /\$/);
}
print "\n";
$t->print("exit");
$t->close;
[download]

Good luck...