I really like the idea of the plugin and gave it a try to see how it worked. I've got a couple of things I think didn't work or could see improvement.
Firstly, the layout of my posts got all messed up. Linebreaks and paragraphs disappeared and I was looking at solid blocks of text.
Secondly, I couldn't find the options bar right away. I'm used to seeing it at the top of the screen from the Admin Bar and for the distraction free writing option when back-end editing.
Although I saw the screenshots and knew I should have found them at the bottom, it just didn't immediately occur to look for it there. Could it be placed just underneath the Admin Bar?
Thirdly, the Admin Bar fades out as well. This surprised me, because except for the distraction free writing mode, it's just always there. The fade-out of it didn't really make sense to me.
Also, the fade-out for the editing bar, especially down in the screen, doesn't make much sense to me either. I prefer to be able to see it at all times, especially since it's not in the most obvious place.
I know it's far from ready, but I do like the idea and definately will use it when it's functioning right. Keep up the good work!