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Not bad! It would take some extra work, but might be cool to allow backspace but force the user to type over what they've already typed.
Yeah, the obvious way would be to draw the text on a canvas, but you wouldn't get sharp text then.
I could nest a span with a negative translate or negative margin to overlap. It could be worth it to print each letter in a css grid (which would work since all the text is monospace) making it super easy to overlap text.
There may be a more hacky/elegant solution which would be to use weird unicode to overlap characters, but I'm not sure how feasible it would be.
Bad UI that looks cool too. Very noice.