I've been thinking for a while, actually, that terminal emulation isn't something I want today.
It might still be appropriate to have some terminal/shell distinction, but emulating an old text-only terminal imposes UI issues. For instance, my shell sometimes prints "you have new mail" to tell me about it. But my computer already has a notification system built-in - I don't need random text strings in my work area. I think the ideas in this mockup are at least moving in the right direction, which is using all of the capabilities of the computer.
It's not clear to me that everything appearing in the terminal is a shell response. It may be a more sophisticated interface than, say, UXTerm, with some mid-level processing for command completion perhaps. At least we can hope....
I see. I would vote the other way- keep the shell intact, and install a new UI. UIs can be swapped out, but breaking the shell may lead to unforeseen undesirable consequences.