I found these two references a long time ago, great intro to readline and how to setup an effective .inputrc:
http://www.chemie.fu-berlin.de/chemnet/use/info/octave/octav... and
http://www.ukuug.org/events/linux2003/papers/bash_tips/
Since then, .inputrc has been an indispensable part of my dotfiles! This one alone saves so much headache:
# Incremental search with Up and Down: add to ~/.inputrc
"\e[A": history-search-backward