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I mean, the developer chose to use Apples limiting browser, that was a choice not a requirement.

Did he have a choice? Is there an non Apple API that could be used here?

Yes - Chromium Embedded Framework (CEF) as used by some popular applications e.g. Spotify and Steam.

Personally I am completely uninterested in using this feature, but I really like iTerm2 overall.

Of course he did, you arent forced to use anything Apple provides you on macos (or even ios these days).