Currently just color escape sequences in the form "CSI n [;k] m" are supported.
Other escape sequences described at http://en.wikipedia.org/wiki/ANSI_escape_code#CSI_codes should be supported as well.
Also, '\r' should correctly go to the beginning of the line without changing the line.
Such changes are not possible with the OW as currently conceived, which is an append-only text buffer (with additional support for setting text attributes like color and hyperlink on text segments when they are printed). The ANSI escape sequence support suffices to colorize output but not implement full curses-style painting; for that, use Window > Output > Terminal.