Nice! This is pretty impressive. I'm not surprised it's caused some frustration.
Cooperative multitasking like this is pretty neat - IIRC MS Windows 3 used that. (I also think it's the best kind that is possible when we don't have any timer interrupts (without resorting to emulation anyway).)
I also agree that a windowed OS based on this would probably not be too hard - in fact, I suspect that might be easier than a terminal based one, since the screen is inherently graphical with no built-in text mode. Though I suppose that could be handled with some library/OS functions. Neither would be trivial, though.