This is definitely another way of doing things. I think the downside of moving this into the kernel (via magics) is that we then need to do this for each kernel rather than at the frontend.
This does touch on the idea that it would be nice to be able to provide a fallback, which relates to Notebook Cell-Type Generaliastion - #7 by agoose77. I’d like to be able to specify a text/markdown fallback which removes the injection markup, i.e. what is {{ x }}? → what is ⚠?