iPodHacks says many “consider Rosetta / Inkwell to be the most advanced handwriting recognition technology yet developed.” And I’ve heard that elsewhere too, since it’s – in part – derived from Newton’s own HWR engine.
I just bought a spare copy of OS X 10.2 Jaguar, and it reminded me that OS X ships with Inkwell. Could my suggestion of a Newton emulator on the iPhone be any easier now? Maybe it’s already done. But how would writing with your pinkie turn out?