I think wordpress would be much better if a plugin was created to that lets me use my SFTP login credentials to update and install plugins.
FileZilla has been handling moving files via the ssh2.sftp tunnel and PuTTY has handled everything else that I don't want or can't use FileZilla for.
I have been hacking away at the shell and php trying to figure out how to make this work, and it occurred to me to make a post here because it really seems like this issue is going to haunt me until WordPress can do what I need it to do. I see a ticket out there on a pure php solution, and it was suggested that a plugin may be the best route.
The major problem seems to be creating the SSH tunnel which requires ssh2.so to be loaded in apache for the PHP hook. Well, FileZilla and PuTTY don't seem to mind the lack of the PHP apache module.
So how can WordPress use PHP to communicate with SSHd without having to rely on apache? Only thing I found so far is this. phpseclib, a pure php SFTP solution. Looks like it will use apache modules if they are there, but if not, then it can fall back on its own subroutines.
No, this doesn't need to be in the wordpress core, but there seems to be a developing niche there to fill. A plugin would be so very useful to people like me who are working to bring wordpress to the throngs of people on shared hosts.
SSH protocols 1.5/2.0
PHP 4.4.4-8+etch4 (cli)
Zend Engine v1.3.0