Yes, the Draft widget is written in Lua. Lua UI and input is definitely not where we want it right now, but the goal of dogfooding it for internal use is that these problems get resolved. There would be no text selection in TextBoxes, no rbxthumb thumbnail loading, and no ViewportFrames, among others, had we avoided Lua because it was imperfect in those areas at the time. Using Lua for internal projects results in some shorter-term inconveniences, but has and will continue to result in major improvements that the community can make use of as well.
I will file a bug for the flickering and make sure that gets fixed. In response to your comments about Roact/Rodux, we are keeping an eye on the technologies we use. Roact/Rodux provide a sense of order to the free range of UI development at scale in Lua, but we are also aware they have downsides such as those you have already mentioned, and that there are other options. For now they are sufficient enough, but we are open to looking at alternatives in the future should the need arise.