(defvar overlay-test-string "%")

(defun overlay-test ()
  (interactive)
  (let ((start (point-min))
        (end (point-max))
        ov)
    (goto-char start)
    (beginning-of-line)
    (while (and (not (eobp)) (< (point) end))
      (setq ov (make-overlay (point) (1+ (point))))
      (overlay-put ov 'display overlay-test-string)
      (forward-line))))

(defun overlay-test-reset ()
  (interactive)
  (dolist (ov (overlays-in (point-min) (point-max)))
    (delete-overlay ov)))