I don't see why not. It would start to resemble a
Commodore One that way.
Hmm... Ditch the dedicated CPU and make the FPGA into whatever CPU is
needed for the particular terminal.
If you really want a hardware solution then this
http://www.digilentinc.com/Products/Detail.cfm?Prod=S3BOARD&Nav1=Produc…
Would be a great platform. I have acting as a 6809 at 12MHz. Just
plug in a PS2 keyboard, VGA monitor, and load paper tape images
through the seial port.
I would rather have an embedded single board computer running
linux. You could get one of those for $200.
Grant