The manual page for XtAppMainLoop says that it's just a simple loop that calls

    XEvent event;
    XtAppNextEvent(app, &event);
    XtDispatchEvent(&event);

... until XtAppGetExitFlag() returns true.

And looking at the code in libXt-1.0.9/src/Event.c seems to show that to be the case.

But: XtAppNextEvent() doesn't return until there's an actual XEvent to be handled; it handles Xt-internal events (inputs, timers, signals) itself, but doesn't return (because of course, those aren't XEvents).  Which means that the exit flag doesn't get a chance to break the loop until/unless there's an actual XEvent.

If you're not using a Display at all in your app, you lose: timers or input sources can't signal the main loop to exit using this mechanism.

A workaround -- and what I would suggest XtAppMainLoop be fixed to do instead -- is code that looks more like this:

    for (;;) {
        XtAppProcessEvent(app, XtIMAll);
        if (XtAppGetExitFlag(app))
            break;
    }

XtAppProcessEvent() returns when *any* event has been dispatched, not just ones that involve a Display.  For the source tree, it would look something like this:

void XtAppMainLoop(XtAppContext app) {
    LOCK_APP(app);
    do {
        XtAppProcessEvent(app, XtIMAll);
    } while (! app->exit_flag);
    UNLOCK_APP(app);
}

Here's some code that shows the problem:

#include <X11/Intrinsic.h>

static void _Tick(XtPointer baton, XtIntervalId* id) {
    static int count = 0;

    printf("%d beep!\n", ++count);

    XtAppContext app = (XtAppContext)baton;
    if (3 == count)
        XtAppSetExitFlag(app);
    else
        XtAppAddTimeOut(app, 3000, _Tick, app);
}

int main(int argc, char** argv) {
    XtToolkitInitialize();
    XtAppContext app = XtCreateApplicationContext();
    XtAppAddTimeOut(app, 3000, _Tick, app);

#ifdef    SHOWBUG
    XtAppMainLoop(app);
#else
    for (;;) {
        XtAppProcessEvent(app, XtIMAll);
        if (XtAppGetExitFlag(app))
            break;
    }
#endif

    return 0;
}

The patch is simple:

$ rcsdiff -c Event.c
===================================================================
RCS file: Event.c,v
retrieving revision 1.1
diff -c -r1.1 Event.c
*** Event.c     2011/02/25 12:58:32     1.1
--- Event.c     2011/02/25 12:59:51
***************
*** 1553,1563 ****

      LOCK_APP(app);
      do {
!       XtAppNextEvent(app, &event);
! #ifdef XTHREADS
!       /* assert(app == XtDisplayToApplicationContext(event.xany.display)); */
! #endif
!       XtDispatchEvent(&event);
      } while(app->exit_flag == FALSE);
      UNLOCK_APP(app);
  }
--- 1553,1559 ----

      LOCK_APP(app);
      do {
!       XtAppProcessEvent(app, XtIMAll);
      } while(app->exit_flag == FALSE);
      UNLOCK_APP(app);
  }