Why does server-eval-at seem to change the behavior of read-string?

Question

I am trying to create a script that, when run with emacs, will read commands from stdin a line at a time, execute them in another emacs process (with server-eval-at) and print the result. The process should exit when no more input is available. I have come up with a basic protocol and everything seems to work when using eval locally, but after introducing server-eval-at the emacs process hangs instead of exiting at the end of input.

For initial development I was doing the evaluation inline, in the same process that was reading the input. That seems to work well. That script looks like

(while (setq command (ignore-errors (read-string "")))
  (setq command (read command))
  (message "[DEBUG] Received command %s" command)
  (let ((result (eval command)))
    (message "[DEBUG] Response received %s" result)))

In a shell script, for easier testing:

#!/bin/sh
cd "$(mktemp -d)"
cat <<EOF > script.el
(while (setq command (ignore-errors (read-string "")))
  (setq command (read command))
  (message "[DEBUG] Received command %s" command)
  (let ((result (eval command)))
    (message "[DEBUG] Response received %s" result)))
EOF
echo '(message "hello world")' | 

emacs --quick --batch --script "$PWD/script.el"

An example of running this, with output:

$ ./t2
[DEBUG] Received command (message hello world)
hello world
[DEBUG] Response received hello world
$

As you can see, the debug messages are printed. The process exits at the end of input. All of this is expected and OK.

Now I want to run the incoming commands on the server, so I use server-eval-at. Here is that script

(require 'server)
(while (setq command (ignore-errors (read-string "")))
  (setq command (read command))
  (message "[DEBUG] Received command %s" command)
  (let ((result (server-eval-at (getenv "RPC_SERVER_NAME") command)))
    (message "[DEBUG] Response received %s" result)))

Another shell script, for easier testing

#!/bin/sh
cd "$(mktemp -d)"
export RPC_SERVER_NAME="$PWD/emacs"
emacs --quick "--fg-daemon=$RPC_SERVER_NAME" >stdout.log 2>stderr.log &
sleep 1
cat <<EOF > script.el
(require 'server)
(while (setq command (ignore-errors (read-string "")))
  (setq command (read command))
  (message "[DEBUG] Received command %s" command)
  (let ((result (server-eval-at (getenv "RPC_SERVER_NAME") command)))
    (message "[DEBUG] Response received %s" result)))
EOF
echo '(message "hello world")' | 

emacs --quick --batch --script "$PWD/script.el"

An example of running this, with output:

$ ./t1
[DEBUG] Received command (message hello world)
[DEBUG] Response received hello world

The output looks fine, but the process does not exit!

I have introspected these processes a few ways:

1. top shows that the server-eval-at emacs (client) is consuming 100% CPU.
2. strace shows that the server-eval-at emacs (client) is calling read on stdin (fd 0) repeatedly, and receiving an empty string each time
3. strace shows that the eval emacs calls read on stdin twice: once to read the command, and once receiving an empty string before exiting.
4. gdb on the server-eval-at emacs (client) has a Lisp Backtrace with read-string at the top.

I inlined server-eval-at and was able to identify that calling accept-process-output is necessary for the subsequent call to read-string (in the next loop iteration) to behave differently, but it is hard for me to dig much deeper than that.

I tried these same steps against emacs 26.3 and observed the same result.

I am using emacs 27.1 on Ubuntu Linux 18.04, as installed with evm.