A terminal emulator running on an object-oriented system like Termkit could run vt100-friendly filters to convert everything to text before it is sent down the line to the user. Users who did not know they were connecting to such a system might not notice the difference.
Although I am not entirely sure what you are attempting to communicate, what I will say is this:
If you do not provide direct user access to a pseudo terminal through a terminal emulator, then you will undoubtedly lose functionality. You need both the pseudo-terminal and the terminal emulator. If you do provide direct user access to the pty through a terminal emulator, then what the hell is the rest of the crap there for?