I plan to make one day an alternative to terminals. My idea is not fully fleshed out, but I would like to try to forgo TTYs altogether. Use only pipes, file descriptors and job control.
One thing to start with is to not throw the user into a screen consisting of a grid of fixed width character cells at the very beginning. This is what immediately sends a signal of discomfort to most users not already familiar with terminal emulators. There's no real reason why the default experience of having a dialog with your system installation couldn't take place within an interface that resembles iMessage or ChatGPT or something like Quicksilver. Things like /bin/rm certainly don't care whether they're being invoked from a terminal emulator that has the conventional look or whether it's in a chat-like interface—it doesn't rely on any line drawing characters or output alignment. Even the Python REPL doesn't depend on that sort of thing a great deal, except for stuff like ASCII art arrows pointing to syntax errors. Only when you want to use stuff like vi or ps and ls helpfully trying to put things into columns will you start running into trouble if your terminal emulator has an non-traditional UI. This can be ameliorated to some degree with heuristics to detect e.g. spaces being used for alignment and cursor positioning escape sequences in the output stream.
The utility in your link, and the entire Arcan system, seem very pleasant to me; a dream of mine is to have a complete graphical LISP command-and-control via an interface like that; like the old lisp machine UIs but with more direct incorporation and seamless handling of multimedia Objects.
I’m working on a similar vision. Except instead of replacing the terminal, I’m turning it into a more of an ergonomic interface for structured data and multimedia.
The closest thing I saw to what I have in mind is this: https://github.com/letoram/cat9/ but more in a way of interface.