I like this, and we've even seen an apple stylus patent (and since I typed this, several other tablets have them at shows, Synaptics has new cap screens with pen capability, etc... patterns are well-established and --
, so easy to do, and coming back into vogue so we'd be on the cutting edge. ALSO: I have been thinking that the only issue with handwriting is corrections (not error rate, but fixing errors) and just played with some Windows 7 tablets. They have fixed it. Really want that input panel on my tablet. Some stuff to learn there: reduce clicks, like offer gestures for state changes such as 'correct' which switches to a character entry mode.
Make sure to mention finger-as-stylus inputs as an aside. Just emerging, but technically possible to do much the same with letter and handwriting recognition.
Value in standing, moving, difficult environments, or for populations (or cultures) with little or no experience with keyboard entry, or no standard keyboard for the data type...
a couple modes (virtual keyboard, natural character entry, short-hand character entry, word entry;
generally as a contextual panel, on the screen, the separate entry areas are no longer required technically so are not suggested
trace the path taken, in no-shit real time, then translate to words as fast as practical
Gestures for key functions; Win7 gesture to insert vs scroll then... etc.
I think cursors are still suggested, for the reason they work on mouse, to express modality; are you on a link, or in a particular tool, you get a different cursor)