#! /bin/sh

  fifo=/tmp/discover-vnc.fifo
  rm -f $fifo
  mkfifo $fifo

  dns-sd -B _rfb._tcp >$fifo &
  pid=$!

  while read line; do
    case $line in *_rfb._tcp.*)
      # do something here.. then test
      # if flag=3 and break otherwise
    esac
  done <$fifo

  kill $pid

Again, untested:

        #! /bin/sh

        timeout=5
        fifo=/tmp/discover-vnc.fifo
        rm -f $fifo
        mkfifo $fifo

        dns-sd -B _rfb._tcp >$fifo &
        pid1=$!

        while read line; do
          case $line in *_rfb._tcp.*)
            # do something here.. then test
            # if flag=3 and break otherwise
          esac
        done <$fifo &
        pid2=$!

        sleep $timeout && kill $pid1 $pid2 &
        pid3=$!

        wait $pid2
        kill $pid3

Because it creates a file in /tmp? Who cares? The alternative is bash voodoo magic.. the same magic that gave us shellshock.

I love this one.

  $ bash --version
  GNU bash, version 3.2.48(1)-release (x86_64-apple-darwin10.0)
  Copyright (C) 2007 Free Software Foundation, Inc.
  $ : & echo $!
  [1] 329
  329