> A terminal used to be a real hardware device: a keyboard and screen connected to a machine, with programs reading input from that device and writing output back to it.
> A terminal emulator like iTerm2 is the modern software version of that hardware terminal.
That's the fundamental fatal flaw of emulating a bad dead hardware design. Are there any attempts to evolve here past all these weird in-band escape sequences leading cats to scratch your face?
Yes. It’s called the X Window System and it’s been around since the ‘80s.
Also the problem here isn’t that iterm2 is trying to emulate terminals, it’s that it’s trying to do something more over the same network connection without making changes to the ssh protocol.