I\'m sure Wave doesn\'t poll the server every millisecond to find out if the other user has typed something... so how can I see what the other person is typing as they type? And
I spent some time reverse-engineering the Google Wave client code (shameless plug for http://antimatter15.com/misc/read/ which is a read-only public client for google wave for all public waves without need of robots or gadgets which was a lot more useful a month ago when Google didn't launch the upgrades).
Anyway, Google uses the GWT framework with certain aspects of the Google Closure library (which is actually open source and documented) and they use the goog.net.BrowserChannel library, which from the comments is also used for chat functionality within gmail.
http://closure-library.googlecode.com/svn/docs/closure_goog_net_browserchannel.js.html