Comment 17 for bug 16492

Hm... i never saw my cursor dissappearing, but now i look closly at my Cursor: Sometimes he dissapears, sometimes not.

In GTK:
Cursor dissapears if you type into a Textbox AND the cursor is over the Textbox
Cursor won't dissapear if you use type-away search in list (type the file you are looking for in nautilus for example)
Not so GTK native application behave randomly:
f-spot: no cursor hiding.
Chromium: Cursor hides in the "Awesomebar" but not in a HTML <textarea>

Conclusion
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X is not respnisble to "enforce" such stuff
GTK Toolkit can't catch all cases of cursor hiding.
Users that are aware that the cursor hides, experience this as random.

What about the Windowmanager? If cursor is over the active window and there is keyboard-activity, then hide the cursor.
This would also catch wine-emulated stuff, and a whole lot of useful apps not with in GTK.