I thought for a moment you'd "stolen" my idea. (stolen in quotes, because I never told anyone, and ideas can be arrived at independantly, why not?)
The idea I had was extending ansi codes to contain specific instructions for NES graphics hardware, along with a special NES rom that could decode them from say, some audio signal via the microphone port, or controller port 2 keys, or whatever input is most convenient.
Such an ansi protocol extension would include things like sprite graphics, tile graphics, sprite positions, in addition to the normal character mode telnet stuff that maps naturally to the NES's tile based background graphics.
That would be pretty neat.
It would let you put a modem attachment on an NES and dial into a server to play games remotely. Such games could even be multiplayer by nature, with a centralised server infrastructure kind of thing.
You can steal it now if you want. I'm not likely to act on it any time soon.
I just wanted to point out that compiling ruby code to .nes has to be the single coolest thing I've seen all year. I mean it. I would love to either fork or contribute to this and provide support for GB/GBC/GBA games.
The benefit of telnet is its ability to operate without authentication, or thin application based authentication. This project doesn't appear to be concerned with a secure remote connection, rather it's a useful toy with low barrier to entry.