It is documented (https://www.zabbix.com/documentation/2.0/manual/appendix/config/zabbix_server and similar for proxy), that Timeout settings affects external checks, as well as SNMP or simple checks. But it is not clear, what happens after Timeout expires.
My quick look in checks_external.c/execute.c points out that forked process and all it childrens are killed after Timeout. Correct me if I wrong.
Anyway, it is worth to explicitly document de-facto behavior in "External checks" chapter.