You're right, it is a problem that only has a workaround, not a fix.
I myself froze the keyboard using titanium.
To make sure text messaging works I use GoSMS (Handcent works as well). With those you have the ability to bring up a bigger text editor (in Go SMS it's a button left next to the default text area, in Handcent it's a button on the bottom)
While it's not a fix, it will work quite nicely. And in both apps the incoming messages come in a popup window, in those popups you can simply type in the text area without a problem.
Gurase, how would one go about obtaining that apk?
Sorry development has been a little slow, there was a change to the cyanogenmod source that rendered our cameras useless (wouldn't connect) (droid x, droid 2, global had this problem as well) but that has been taken care of, I haven't had any connection problems between switching from 3G to wifi and back and forth in the last day, so I think I think I've found a fix for that (you have to ensure your phone doesn't turn on with the wifi on so make sure you turn the wifi off before powering off or restarting) and I will fix that stupid portrait virtual keyboard issue that I failed to fix before the last build. There haven't been many things you've missed in the last month or so (a new lock screen has been implemented and source code optimization). The battery life for the newer builds has been an hour or shorter than the build you guys are running (can't find out why, haven't really looked, but is still really annoying) but other than that, there should be a new build posted tomorrow morning and I will post my speedy 3.8.7 to Gingerbread kernel .zip file so you don't have to do the fully install to gingerbread, then wipe.
I will also need a test dummy for going from 2.26.60 (the old froyo base for cyanogenmod 7) to 3.8.7 and then from 3.8.7 to Gingerbread. It will be four .zip files that you will need to flash, they're only like 5 megabytes each so all for should take a combined 2-3 minutes in clockwork. Please PM me if you'd like to be my guinea pig, have a full battery and be willing to SBF if something goes wrong (you won't brick your phone, you will just need to SBF)