The notation is cumbersome, but I like the visualization. I wish eta-reduction were implemented rather than just beta-reduction.

Unfortunately there appear to be some errors. Try entering the following expression:

#(##2 1)

This, if I've understood the notation correctly, means λx.(λy.λz.y)x. Thus, it should reduce to λx.λz.x, or ##2. However, the program instead reduces it to ##1, or λx.λz.z.

So, something's really wrong here.