One can change the height of xkbd with the -geometry option, but the width is fixed.

Could you add a button to minimize the height to 8 pixels, then restore the size of xkbd after a stylus tap into the bar? This would be another way to get the kbd out of the way.

http://matchbox-project.org/sources/...-keyboard/0.1/ << another vkbd - not compiling for me yet
(edit) compiled, see http://pupnik.de/matchbox-kbd.html

http://slappy.cs.uiuc.edu/fall01/team3/download.shtml << another vkbd - not compiling for me yet

http://handhelds.org/~mallum/xkbd/ << xkbd sources (compiles without changes)

Cheers!