Terminals should be able to show images, so you could run Jupyter notebooks in them.

Terminals can show images https://sw.kovidgoyal.net/kitty/graphics-protocol/

Ok, maybe I should have said "framebuffers" instead of images.

Because that Kitty protocol seems limited in that interaction was not one of their goals.

What's the point? If you want a framebuffer, ask the windowing system for one. Why go through a terminal emulator?

Because this one works through screen/tmux, and works over ssh without messing with DISPLAY variables and such.

First example on the Kitty image protocol sent above looks pretty interactive:

https://github.com/chase/awrit

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Sixel and ReGIS have been around for decades.