No, I would not describe this as expected behavior. I'm using isapi_wsgi and have seen excellent performance. However I am not using Django - it's purely an internally developed web framework.
Have you replicated this problem with very simple WSGI scripts, such as the test one that comes with isapi_wsgi?
Offhand it sounds like a deadlock or other resource contention that is timing out. If you're using a database connection or other shared resource, that'd be the first thing I'd look at once I determined the problem wasn't happening on very simple test cases.