This program is exactly what we usually recommend for people who aren't using SML/NJ inside of an Emacs inferior window (which is far and away the most common usage mode for experienced SML/NJ programmers - all ten of us <grin>).

I personally apologize for my laziness. Two or three different times I've started in on making something similar to the haskeline package in GHC to provide readline-style support to make life easier for students, but have never quite finished it up. Unfortunately, "just linking" readline/libedit isn't a very friendly solution given the way that the interpreter is currently architected, as it's written on top of the ML basis library primitives for reading/writing individual characters from the input stream.