Would an encrypted tunnel solve the SeqNo guessing attack?

[bet () std sbi com (Bennett Todd)]

I'm not keen on the idea of people grabbing my telnet session away from me
and making free with it. I'm resigned to the notion that they can steal
it; I'd like to make it useless to them once they've got it.

Suppose I took term (a multiplexing, compressing, error-correcting serial
tunnel program) and added encryption, and rigged that to be my login shell.
I'd log in to the computer, and after my S/Key prompt it'd fire up an
encrypted term. I don't see any way some could burgle in through that.

Have I missed something fundamental here? Or would this work?

-Bennett
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