Textures was such an implementation, on Mac OS, and it was created in the mid eighties. It had a “Flash Mode” feature which worked exactly as Knuth describes in the TeXbook. I suppose Knuth was referring to Textures among others. It has been extant until a couple of years ago. Since then, I've got no news about it…
What happened to Textures and Bluesky Research?
On Mac OS X, Claus Gerhardt's Flashmode allows this feature on TeXShop. (I've not tested it yet, but others do use it and it seems to work well.)
Edit As indicated in the previous link about Textures, there is a new site dedicated to it: http://www.blueskytex.com. It provides a (free) download link to a no longer developed beta version for Mac OS X. More news are promised for soon (2015 July 1).