diff --git a/distributed/build-remote.pl b/distributed/build-remote.pl
index 12cb272b9..44482530b 100755
--- a/distributed/build-remote.pl
+++ b/distributed/build-remote.pl
@@ -80,6 +80,21 @@ if (!defined $machine) {
     }
 }
 
+sub writeLoad {
+    system "echo A >> /tmp/blaaaa";
+    open LOAD, "> /home/eelco/nix/distributed/current-load" or die;
+    system "echo B >> /tmp/blaaaa";
+    foreach my $cur (keys %machines) {
+        system "echo $cur $curJobs{$cur} >> /tmp/blaaaa";
+        print LOAD "$cur $curJobs{$cur}\n";
+    }
+    system "echo C >> /tmp/blaaaa";
+    close LOAD;
+}
+
+$curJobs{$machine} = $curJobs{$machine} + 1;
+writeLoad;
+
 sendReply "accept";
 open IN, "<&4" or die;
 my $x = <IN>;
@@ -87,30 +102,27 @@ chomp $x;
 print "got $x\n";  
 close IN;
 
-print "BUILDING REMOTE: $storeExpr on $machine\n";
+system "echo $x >> /tmp/blaaaa";
+system "echo $curJobs{$machine} >> /tmp/blaaaa";
 
-$curJobs{$machine} = $curJobs{$machine} + 1;
-
-sub writeLoad {
-    open LOAD, "> /home/eelco/nix/distributed/current-load" or die;
-    foreach my $cur (keys %machines) {
-        print LOAD "$cur $curJobs{$cur}\n";
-    }
-    close LOAD;
+if ($x ne "okay") {
+    $curJobs{$machine} = $curJobs{$machine} - 1;
+    system "echo $curJobs{$machine} >> /tmp/blaaaa";
+    writeLoad;
+    exit 0;
 }
 
-writeLoad
-
+print "BUILDING REMOTE: $storeExpr on $machine\n";
 
 my $ssh = "ssh -i $sshKeys{$machine} -x";
 
-my $inputs = `cat inputs`;
+my $inputs = `cat inputs` or die;
 $inputs =~ s/\n/ /g;
 
-my $outputs = `cat outputs`;
+my $outputs = `cat outputs` or die;
 $outputs =~ s/\n/ /g;
 
-my $successors = `cat successors`;
+my $successors = `cat successors` or die;
 $successors =~ s/\n/ /g;
 
 system "rsync -a -e '$ssh' $storeExpr $inputs $machine:/nix/store";
@@ -136,4 +148,4 @@ foreach my $output (split '\n', $outputs) {
 
 $curJobs{$machine} = $curJobs{$machine} - 1;
 
-writeLoad
+writeLoad;
diff --git a/src/libstore/normalise.cc b/src/libstore/normalise.cc
index 0673814ba..5d0009539 100644
--- a/src/libstore/normalise.cc
+++ b/src/libstore/normalise.cc
@@ -91,6 +91,9 @@ struct Goal
 
     /* The remainder is state held during the build. */
 
+    /* Whether it's being built by a hook or by ourselves. */
+    bool inHook;
+
     /* Locks on the output paths. */
     PathLocks outputLocks;
 
@@ -201,6 +204,11 @@ private:
        of derivation expressions that have yet to be normalised. */
     Goals goals;
 
+    /* Finished goals are removed in run() at top-level; they are not
+       deleted as soon as they are finished, since there may be
+       references hanging about. */
+    PathSet deadGoals;
+
     /* The set of `buildable' goals, which are the ones with an empty
        list of unfinished inputs. */
     PathSet buildable;
@@ -237,8 +245,11 @@ private:
 
     void startBuildChild(Goal & goal);
 
-    bool tryBuildHook(Goal & goal);
+    typedef enum {rpAccept, rpDecline, rpPostpone} HookReply;
+    HookReply tryBuildHook(Goal & goal);
 
+    void terminateBuildHook(Goal & goal);
+    
     void openLogFile(Goal & goal);
     
     void initChild(Goal & goal);
@@ -353,6 +364,12 @@ void Normaliser::run()
             do {
                 printMsg(lvlVomit, "waiting for children");
             } while (!waitForChildren());
+
+        /* Remove finished goals from the graph. */
+        for (PathSet::iterator i = deadGoals.begin();
+             i != deadGoals.end(); ++i)
+            goals.erase(*i);
+        deadGoals.clear();
     }
 
     assert(buildable.empty() && building.empty());
@@ -361,7 +378,12 @@ void Normaliser::run()
 
 bool Normaliser::canBuildMore()
 {
-    return building.size() < maxBuildJobs;
+    /* !!! O(n) - not that it matters */
+    unsigned int localJobs = 0;
+    for (Building::iterator i = building.begin();
+         i != building.end(); ++i)
+        if (!goals[i->second].inHook) localJobs++;
+    return localJobs < maxBuildJobs;
 }
 
 
@@ -378,12 +400,18 @@ bool Normaliser::startBuild(Path nePath)
         format("starting normalisation of goal `%1%'") % nePath);
     
     /* Is the build hook willing to accept this job? */
-    if (tryBuildHook(goal)) return true;
+    switch (tryBuildHook(goal)) {
+        case rpAccept: return true;
+        case rpPostpone: return false;
+        case rpDecline: ;
+    }
 
     if (!canBuildMore()) {
         debug("postponing build");
         return false;
     }
+
+    goal.inHook = false;
     
     /* Prepare the build, i.e., acquire locks and gather necessary
        information. */
@@ -616,10 +644,17 @@ string readLine(int fd)
 }
 
 
-bool Normaliser::tryBuildHook(Goal & goal)
+void writeLine(int fd, string s)
+{
+    s += '\n';
+    writeFull(fd, (const unsigned char *) s.c_str(), s.size());
+}
+
+
+Normaliser::HookReply Normaliser::tryBuildHook(Goal & goal)
 {
     Path buildHook = getEnv("NIX_BUILD_HOOK");
-    if (buildHook == "") return false;
+    if (buildHook == "") return rpDecline;
     buildHook = absPath(buildHook);
 
     /* Create a directory where we will store files used for
@@ -676,21 +711,17 @@ bool Normaliser::tryBuildHook(Goal & goal)
 
     if (reply == "decline" || reply == "postpone") {
         /* Clean up the child.  !!! hacky / should verify */
-        /* !!! drain stdout of hook, wait for child process */
-        goal.pid = 0;
-        goal.fromHook.closeReadSide();
-        goal.toHook.closeWriteSide();
-        close(goal.fdLogFile);
-        goal.fdLogFile = 0;
-        goal.logPipe.closeReadSide();
-        building.erase(pid);
-        return reply == "postpone";
+        terminateBuildHook(goal);
+        return reply == "decline" ? rpDecline : rpPostpone;
     }
 
     else if (reply == "accept") {
 
-        if (!prepareBuild(goal))
-            throw Error("NOT IMPLEMENTED: hook unnecessary");
+        if (!prepareBuild(goal)) {
+            writeLine(goal.toHook.writeSide, "cancel");
+            terminateBuildHook(goal);
+            return rpAccept;
+        }
 
         Path inputListFN = goal.tmpDir + "/inputs";
         Path outputListFN = goal.tmpDir + "/outputs";
@@ -717,17 +748,35 @@ bool Normaliser::tryBuildHook(Goal & goal)
             s += i->first + " " + i->second + "\n";
         writeStringToFile(successorsListFN, s);
 
-        string okay = "okay\n";
-        writeFull(goal.toHook.writeSide,
-            (const unsigned char *) okay.c_str(), okay.size());
+        writeLine(goal.toHook.writeSide, "okay");
 
-        return true;
+        goal.inHook = true;
+    
+        return rpAccept;
     }
 
     else throw Error(format("bad hook reply `%1%'") % reply);
 }
 
 
+void Normaliser::terminateBuildHook(Goal & goal)
+{
+    /* !!! drain stdout of hook, wait for child process */
+    debug("terminating build hook");
+    pid_t pid = goal.pid;
+    int status;
+    if (waitpid(goal.pid, &status, 0) != goal.pid)
+        printMsg(lvlError, format("process `%1%' missing") % goal.pid);
+    goal.pid = 0;
+    goal.fromHook.closeReadSide();
+    goal.toHook.closeWriteSide();
+    close(goal.fdLogFile);
+    goal.fdLogFile = 0;
+    goal.logPipe.closeReadSide();
+    building.erase(pid);
+}
+
+
 void Normaliser::openLogFile(Goal & goal)
 {
     /* Create a log file. */
@@ -841,7 +890,7 @@ bool Normaliser::waitForChildren()
         Goal & goal(goals[i->second]);
         int fd = goal.logPipe.readSide;
         if (FD_ISSET(fd, &fds)) {
-            unsigned char buffer[1024];
+            unsigned char buffer[4096];
             ssize_t rd = read(fd, buffer, sizeof(buffer));
             if (rd == -1) {
                 if (errno != EINTR)
@@ -1047,9 +1096,10 @@ void Normaliser::removeGoal(Goal & goal)
         }
     }
 
-    /* Remove this goal from the graph.  Careful: after this `goal' is
-       probably no longer valid. */
-    goals.erase(goal.nePath);
+    /* Lazily remove the goal from the graph (it will be actually
+       removed in run(); this is since callers may have references to
+       `goal'). */
+    deadGoals.insert(goal.nePath);
 }