--timeout option doesn't work when copying between directories

[Marco Nelissen]

It appears that the --timeout only works when using the rsync
protocol, but not when copying between two directories. So if the
destination is on a network filesystem and the network link is
disconnected, rsync will only abort the operation once the underlying
system finally reports that the destination is no longer reachable,
which can take quite a while.
Is this the intended behavior? If so, should the documentation/manpage
spell this out explicitly?