Good points, displaying the mode isn't enough as you cannot guarantee that the point of display will be sufficient to keep the mode as the user's locus of attention.

In vim I get around this by habit, I stay in command mode and only enter insert mode for text entry, and then at the end of a 'unit' of text entry I return to command mode.

Thus I always know when I am in insert or command mode by asking 'am I currently entering text', for me hitting ctrl-c after finishing a sentence is part of the act of writing the sentence.