Entering a PIN is actually an outdated method of pairing, now called Legacy Pairing. Secure Simple Pairing Mode is available in Bluetooth v2.1 and later, which comprises most modern Bluetooth devices. SSPMode authentication is handled by the Bluetooth protocol stack and thus works without user interaction.
Here is how one might go about connecting to a device:
# hciconfig hci0 sspmode 1
# hciconfig hci0 sspmode
hci0: Type: BR/EDR Bus: USB
BD Address: AA:BB:CC:DD:EE:FF ACL MTU: 1021:8 SCO MTU: 64:1
Simple Pairing mode: Enabled
# hciconfig hci0 piscan
# sdptool add SP
# hcitool scan
00:11:22:33:44:55 My_Device
# rfcomm connect /dev/rfcomm0 00:11:22:33:44:55 1 &
Connected /dev/rfcomm0 to 00:11:22:33:44:55 on channel 1
Press CTRL-C for hangup
This would establish a serial connection to the device.