The most urgent fix for iOS text selection and keyboard woes [Updated]

So it there is one thing that has gotten stale in iOS, it's text editing. Both Android and Windows Phone offer far superior typing experiences compared to the soon six year old iOS keyboard - heck, even Blackberry beats them now!

I won't go through all the areas that need improvement, and have instead decided to focus on "cursor movement". Whenever you mistype a word you need to use that pesky, woefully inadequate loupe. Personally I almost never get it right on the first try, and I have slim fingers. As a result I find myself completely deleting mistyped words instead of going back with the loupe and change that one wrong letter.

So here's my proposal for a solution. When tapping and holding, separate the letters so it's easy to wedge in the cursor between them, and magnify the letters so your own thumb won't obscure the cursor. The touch target of the cursor also extends a bit below it so you can move the cursor by dragging just a bit beneath it (and not obscure the text or cursor).

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Could my idea be improved, or did it suck ass? Have you seen better alternatives elsewhere? Let me know in the comments and please recommend the post if you liked it.

Update

vanglorious reminded me of this video where you swipe across the keyboard to move the cursor. It's a very good concept except for one thing: You can't swipe between keys anymore.

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Say I want to go to the The Verge and accidentally press the "H" key instead of the "G". That's no problem, I just slide my finger to the left without letting go.

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The concept in the video would prohibit though, so how would you combine the two?

I figured you could confine the swiping to the bottommost row keys. For example, in the image above, this would be from the "OK" to the "123" button.

Here's an example where I've combined the swiping with my original idea:

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Hovering above the key...

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Aaand touch down!

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Aaand swiped!

Do you think the new version is better?