$ file /usr/games/fortune outputs 
/usr/games/fortune: data

ls -la fortune
-rwxr-xr-x   1 root  wheel  43264 Aug 12 00:15 fortune

as for the terminal, i am using xterm, so my settings for up,down,
left, right come out the same as yours as escaped characters.

I know that vi can allow you to move while you are in insert mode, we
do it on the red Hat 9 machines at work all the time