I have looked a little bit into it. The problem is that grey scale requires flashing the area on and off a lot, so it's quite visibly disturbing. My idea was to first draw the character in fast mode, then if it hadn't been touched for a while update it in grey scale mode. I haven't tried implementing this yet, but it might work if the blinking isn't too disruptive. Having syntax highlighting would definitely be nice, other ways of getting it I've though about is getting my editor to use fonts for highlighting instead of color.
I wonder, is there any practical way to do 1-bit just around the cursor?