If you keep increasing the Y value of the cursor, things get weeeeiiird. First, the CPU usage goes out the roof. Second, there's a weird area in the corner that obscures the text. Here's a bit of code that will reproduce the problem:

function _init()
	y=110
	f=0
end

function _draw()
	cls(1)

	f+=1
	if (f%20==0) y+=1
	cursor(0,y)
	print("hai")

	print("cursor_x:"..peek(0x5f26).."\ncursor_y:"..peek(0x5f27).."\ny:"..y.."\ncpu:"..stat(1),0,0,7)
end

And this is what happens:

The area that obscures the text isn't just in the corner. It's just obscuring the text itself, no matter the X coordinate. Like so:

Is it the scrolling thing, maybe? If printed text would go off the bottom of the screen, by default it copies the contents of the screen upwards the height of a line to make room, and that uses a lot of CPU.

I have no explanation for the letters disappearing - maybe zep didn't expect people to use the cursor() command this way?

Yeah, the scrolling of the screen memory is expected. That's just what happens when you print text without explicit coords and the cursor y position is just too low to show the text on-screen. But the CPU going through the roof and the weird text obscuring is definitely not expected. :D