That example is actually running dash - the Debian Almquist shell.

The weirdness (and reason that cd + setting variables doesn't work) is because whenever you type a command in, it executes:

$ dash -c '$COMMAND'

Rather than having a long-running shell process listing to standard in. We plan to fix this and implement a full TTY subsystem in the next month or so.

Probably not. If you read the source, This thing has no real idea of processes.