This post has aged like milk given the rollback. In the amount of time it's taken them to fix it, including lobbying xterm.js upstream and telling users "use a modern terminal emulator", you'd be hard-pressed to convince me they'd have burned more goodwill with paying customers than they already have if they'd quietly switched to alt-mode. It's a downright embarrassing bug for such a high-profile company.
Presumably preference of their users. From what I know, other than for cursor, the GUI interfaces are less popular than the TUI ones. Personally I also did not expect that I would really like the TUI experience, but it's hard for me to switch away from it now because it has become so central to my workflow.
Because making a decent GUI is harder than making a decent TUI. Also TUIs give you some nice things for free like working over SSH easily, but I suspect the lower dev effort is the big thing.
I considered a GUI for a small Python project of mine, but couldn't find anything quick, simple, and portable. I ended up opting for a TUI with a few ASCII art boxes.
Claude Code seems neither quick nor simple