Your comments

Yes, this to me is the more valuable version of "overwrite mode".  If you are editing text like MultiMarkdown Tables where the position of characters on the screen should remain unchanged as you edit parts of a line then you need the following behaviour:

  • Typing always overwrites the text that is there.
  • Typing beyond the end of a line extends the line.
  • Pasting onto a line should overwrite the text from the cursor to the right, not insert characters.
  • If text is selected when you paste the code could either ignore the selection and act as though the cursor was just before the selection, or it could use the selection to constrain the paste. So, if the pasted text is shorter than the selection it could pad the text with spaces thereby clearing the end of the selection that isn't overwritten by the pasteboard content, and if the pasteboard content is longer than the selection it could only overwrite truncated to the selection.
  • Pressing delete does not shift all the characters one space to the left, it just fills the character position with a space.
  • Clicking the cursor beyond the end of the line is allowed.  If you type anything the line is padded with spaces to the point where the typing begins.
I think all this functionality is present in TextMate.
Not so convinced about the need or benefit of allowing font size changes, but implementation of bold, italic and underline would be very useful.