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What you're describing is a graphical shell. If you want it over the network, we have a protocol for that, it's called X. Misusing a terminal for this is fundamentally pointless.
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Nope. X is too slow to be useful except on local networks, and alternatives like FreeNX or xpra are difficulty and janky to set up. Also X is dying so you really mean something like waypipe or worse (which also jankily failed to run some external command when I last tried it).

But I don't want that anyway. I want something graphical that's actually integrated into the terminal.

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Probably not running over a network. Also I'm not seeing anything GUI-like.
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Sixels are hilariously inefficient. Think "motion xpm".
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But it's running over a network. I'm not sure what you're asking for otherwise.
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