Oh my, this reminds me on a very old project of mine from the early 90ies. I called it "graffiti" and it was a brickwall where you can – well – "paint" on.

However it was completely ASCII-text based – the wall drawn using ASCII characters, and the "paint" tools ASCII as well. It was designed to run in a BBS mailbox environment.

The wall could actually scroll horizontally on a 80x25 text screen.

Never got really finished...

Remarks to the source code:
1) Is it necessary to send the grid to user DIV-by-DIV ? I think some client-side javaScript repeater can make it more elegant (and more tiny tiny for the banwidth) than the server-side one. (Maybe this would be too demanding for UI ??)
2) Why it isn't a simple (stylled) table? There is no need to absolute position every "pixel"; if it was divided into rows (I think in this case usage of the TABLE element woul'd be accurate) …
3) … then you can get the ID of each pixel simply from the (DOM) position (n-th cell in n-th row)
[ 4) see wery rough scrap here: http://eldar.cz/myf/pub/try_grid.html; pardon me if my notes are silly; I am not a programmer]

Michael, I think your approach would be possible as well, you are right. During writing of the code I had some layout problems with a table (which I did try first, but IIRC there was always some spacing inbetween cells – and yeah, I know it's possible to get rid of this), so I quickly rewrote it to DIVs get it working.

As for using JavaScript to write the cells, right, I'm sure that's possible as well. For different reasons I usually try to have as much as possible on the server-side, and that's one of those cases. But both approaches are possible (maybe more a matter of taste).