I was in the room when he started typing this - I walked into YC that day to be met by PG bubbling with delight about how Etherpad had implemented playback and he was about to try it out. He was like a little kid about to get a birthday present. IIRC, he wanted it so he could see how he actually writes.

I watched over his shoulder for a little while, but it feels intrusive to be standing there breathing down someone's neck while they think and write, and hey, I could just play it back later, so I left.

Memory is fallible after so much time but I think he told me later that he wouldn't keep using it because he was so used to vi. I want to add that he was going to try to get the Etherpad guys to implement vi shortcuts but that feels suspiciously like the sort of embellishment that creeps into a story years later.