Nice! I started to mess with the same idea some time ago, but ended up very busy and didn't have the time to finish it.
I also made a proof of concept for a raycast shader that would work great with this. It still needs a lot of polishing to improve precision, correct some distortions and achieve better performance, but it proved feasible:
Raycast Shader Demo
WASD / Arrows - move
Mouse - rotate view
Left Click - draw at cursor
Right Click - erase at cursor
Mouse Wheel - change "angle" of view
M - show/hide map
*There's no mouse lock, so if you rotate too much to one side you need to rotate back to aim correctly. Also the draw/erase only works when you click over the window.
Hopefully I will finish it someday, then we can combine it with mode7 for old school FPSs.