I'd get rid of the errmode, anyway, or at least change it to a simple return call. That way, if there is an error, you can call errmsg() and see what it is.

I've seen signal handlers die randomly sometimes. (In the perlipc manpage, it says that some system libraries aren't reentrant, and trying to do too much in a sighandler can cause nasty things like coredumps.) That doesn't look to be the case in Telnet.pm, as far as I can see.

wait just looks wrong. Why would you need to wait for a CHLD signal?