I've been playing with writing little custom SSH server stuff recently as well—try this for example:
ssh hello.dn.ht
One thing I've been testing to get some extra vertical resolution on graphical stuff is the unicode half block character (https://en.wikipedia.org/wiki/Block_Elements) with a separate foreground and background color. Works ok, but background color can bleed through depending on the font you use.
I'm using my own text webcam thing: https://github.com/dhotson/txtcam .. not too fancy, just using greyscale with some shading characters to do some basic "dithering".
Also, if you're on Mac OSX and using iTerm2 version 3, you might be interested in its 24bit colour support. It's not that widely supported yet in other terminals unfortunately though: https://gist.github.com/XVilka/8346728
I never even knew that there was true colour support in terminals, let alone how many terminals support it! Hmm, so I'd need to figure out if SSH sends the terminal's ability to render true colour. And then also update hiptext. It would make a really big difference to the "readability" of the texttop output.
ssh_dispatch_run_fatal: Connection to 107.170.66.146 port 22: invalid format