Not really better engineering[+], I think, so much as perseverance—Emacs originally had the same character-grid limitation, and has gone through multiple display-engine (etc) rewrites to get to the point it's at now, and the amount of pain involved along the way has been ... considerable. There are still limitations stemming from the original design that are going to require even more pain to remove.
[+] This isn't a diss, mind you—I use Emacs, and love it, and have done a fair bit of Emacs development.
I think that re-engineering Vim to be more like Emacs under the surface would lend itself well to other things, like what you are suggesting.