(defun read-line-with-timeout (stream timeout)
  (let ((deadline (+ (get-internal-real-time) (* timeout internal-time-units-per-second))))
    (with-output-to-string (bag)
      (loop for c = (read-char-no-hang stream nil :eof)
            until (eql c #\newline) do
            (case c
              ((nil)
               (when (>= (get-internal-real-time) deadline)
                 (return-from read-line-with-timeout :timeout))
               (princ ".") (force-output)
               (sleep 0.5))
              ((:eof)
               (return-from read-line-with-timeout :eof))
              (t
               (princ c bag)))))))

;;(trace read-char-no-hang)

;;
;; NOTE: SBCL as of 2.0.2 will hang in READ-CHAR-NO-HANG, when you
;;       type an EOF.
;;

(progn
  (terpri)
  (write-line ";; I will timeout after 10s, and either return what you said")
  (write-line ";; or :TIMEOUT, if you're not quick enough, or :EOF on EOF.")
  (write-line ";;")
  (write-line ";; A dot is displayed every 1/2s while I wait.")
  (write-line ";;")
  (princ "Say something > ")
  (force-output)
  (format t "~&;; I got ~S.~%" (read-line-with-timeout *standard-input* 10))
  (force-output))