Imagine the area around Harns with lots of people afk. The air would be cluttered with chat bubbles.
I have no idea about how easy it would be, but my initial worry is the same as Kiaerulf's thought here. I can see it being very useful, but if I was going to see something on screen for every player who is not actively typing (and possibly every player who is as well?), I'd just want to turn it off. We might also get some frustrated public speakers when they find their audience has 'fallen asleep'.
Illysia's /away idea which would be a good way to avoid it kicking in when it's not actually wanted. The information could just be shown once that command is used, but if there's no way to make it automatic I'd worry that it wouldn't work as hoped. If someone has to leave the screen there's no guarantee they'll remembered to use that command first, so you still wouldn't know for sure if they are there or not.
Instead of a chat bubble, maybe some kind of indicator in the chat window or information window that just shows for the character you have selected? Then you'd still be able to check the status of the person you're RPing with without needing any clutter on your screen from other characters.
I also think it maybe should be an opt-in thing. That shouldn't make any problems as if you select the person and it shows neither typing nor not typing, you'd know they haven't opted in and could choose if you wanted to wait to find out.