I totally agree with you. Despite having grown up debugging code on paper of necessity, I now absolutly abhor having to "do code" without being able to run it.

There are problems though. Providing an editor that everyone is comfortable with using is one.

As an aside, I hate coding whilst being watched. I terminated an interview early once because the guy insisted upon sitting at my side, and reading over my shoulder making sucking sounds, whilst I sat their silly tests. It was indicative enough of the management style of the place for me to know that I didn't want to work there, even if I had sucked it up and passed their tests.