The framework does output buffering by default, but it should be switched off when in cli mode.
You might have to check if output buffering isn't configured in your php.ini (by default a lot of distro's define a 4096 byte output buffer, effectively enabling buffering in cli mode too).
And if it is, check of you can disable it at the beginning of your script (for example by using an ob_end_flush() call. Perhaps this check should be done by the framework, so if you have managed to solve it, please let us know.
I have other PHP frame working in the same server and its command line shell does return line by line output while it's running. It is strange how Fuel doesn't.
For example, I am selecting all data from a table and do something to it one by one with foreach() and print_r() this result within this foreach(). Fuel returns all the print_r() output when the shell is finished.
Ok, so although Fuel doesn't enable output buffering in CLI mode, something else does.
I'd classify that as a bug, perhaps we should explicitly disable it instead of just not enable it. Could you create an issue for this at https://github.com/fuel/core/issues ?