low-overhead encrypted telnet

I don't, but I would question the wisdom of putting lots of effort into a telnet encryption scheme. I would think it would be much more productive to build an encryption scheme at the network level

The reason that encrypted telnet is a good thing is that modification at the network level requires kernel modification, and encrypting a telnet does not. Installing an encrypted telnet daemon does require sysadmin cooperation, but it doesn't mean recompiling the kernel. As such, encrypted telnet is a good intermediate while the long term solution of encrypted IP gets developed and deployed. Eric