You should not use REJECT for all traffic that does not match, as it opens you up for DOS. At least rate-limit it using the rate module.
Try removing the INPUT -j REJECT rule, so iptables should be allowing everything through everywhere and see if you still get the timeouts.
If that doesn't work help enable the rule again and run 'tcpdump -i eth0 port 53' and post the output.
One trick I use when debugging iptables is to make a specific rule what what I think the traffic should match, and then run 'watch' on 'iptables -vnL'. This will give you a realtime update on what rules are matching.
Set up some rules to match for our BIND traffic:
Code:
iptables -I INPUT -p udp --dport 53 -j ACCEPT
iptables -I OUTPUT -p udp --sport 53 -j ACCEPT
Watch the counters on the left.
watch --interval 0 'iptables -vnL | grep -v "0 0"'
('grep -v' removes any lines that match '0 0' which is an iptables rule with no matches yet. You might not need that unless you have lots of rules)