I've had limited success with the input panel myself. Basically in the on_change below you want to make the panel do stuff like add more text right? I wanted to make it disappear, wasn't sure how to do that..
show_input_panel(caption, initial_text, on_done, on_change, on_cancel)
Another way to get around this might be to have a "mode" the way the Vintage plugin does (you can write to the status bar maybe?) You can literally bind the alphabet to the mode, I'm doing that for the plugin I'm working on.