@gferreira: Thank you for your comment and the TP. A good choice for the cover of Gödel, Escher, Bach? Well, that's quite a compliment. I love that book.

I can only hope I am the first with this fractal type concept. There are some examples of letters-in-letter design, but not in fractal fashion.

I thought about the space glyph too. Actually, there should be a black & white pair a space glyphs. What pattern could it be without compromising the period and other punctuation marks I can't tell right now. I still have some problems how to accommodate B&W pairs of glyphs within the same font. I think, I should learn more about Open Type.

3rd Iteration: A very good question. Back in August, when this idea came I've made a lot of calculations. It is easy to compute the size of a glyph in bricks:
1st Iteration: 7x7=49
2nd Iteration: 49x49=2401
3rd Iteration: 343x343=117649

117649 bricks for a single glyph would be gargantuan size. And here comes Mirkwood Nano, a sub-brick pixel font into the picture. Having just half the height and width, a quarter of the overall size of M. Regular/M. 1st Iteration it could reduce the size of the 3rd Iteration by 75% to a more comfortable 29412.25 bricks. In other words the height will be 171.5 instead of 343 bricks. I've run a test with a single character (it was only a checkered pattern) before starting to build the 1st and 2nd Iteration. It worked, but Fontstructor slowed down quite a bit. I don't want to build the whole set, but only 4 characters, as a proof of concept.

I've already made them in Illustrator and Photoshop. But the real ones in FS won't be an easy cut-and paste affair. The small letters - corresponding to the 1st and 2nd Iter. - end with half a brick on two sides, so you can not use them simply as building blocks. There will be a lot of brick-by-brick handiwork.