The GUI front-end may be running on one host and the application (Linuxconf for one) may be running accross the network, on another host, potentially over a slow link. The current protocol is fairly half duplex, providing adequate performance.
The cursor management is done using an heuristic. Each time there is an action done on the front-end that requires some work by the application, the "wait" cursor is selected.
Once the application is ready to accept more message from the front-end it send the "Alive" (52) message. This primitive has no argument. The front-end put back the normal cursor on all dialog.
Experience has shown that it is working quite well. The application do not have to care. For light operations over fast link, there is not visual effect. Whenever the application take some time to react we see the wait cursor.