The OpenBSD people have cleaned up and enhanced PD ksh with great features. E. g.
PS1=`\u@\h'works like under bash (try this with a standard PD ksh).
So I ported the OpenBSD version of ksh to Linux.
In Version 0.3
In Version 0.2
Here is a TGZ Binary. It's linked against libc6. It should be working on most distros.
Here is a DEB package built on etch. It should run on all current Debian and Ubuntu Versions.
Here are the sources. You need pmake (parallel make from BSD) to build it, which you can get here
Do you have EDITOR variable set to vi,vim or something similar? Then ksh switches to vi mode, where this feature isn't available. Do "set -o emacs" in your .profile, and it should work like you're expecting