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And that works remotely? So the X protocol?

Sure, that's one option. You could also implement something like NeWS where the graphics code runs locally.

Most people would just use X or VNC today, but I agree having more graphic integration reliably available in the shell is interesting.

Apart from various experimental support for new mechanisms in various terminal apps, there are two old formats that is supported reasonably widely: ReGIS [1] and Sixel [2]

[1] https://en.wikipedia.org/wiki/ReGIS

[2] https://en.wikipedia.org/wiki/Sixel

The issue there is standards. How do your program talk to the kernel and hardware such that all this gets drawn? Especially in a modern multitasking environment, where no single binary, outside of the kernel, has complete control of the hardware.

We have full resolution full colour frame buffers. But instead of typing into them, we end up with grunt and poke interfaces.

FWIW, Bloomberg Terminals might be something in line with what you want.