I agree that this method is not particularly great but you are missing the use case.
This is useful for cases where you trust the person you are sending to (to not print screen, etc), and also don't care about third party knowing the message.
Security is a spectrum not an absolute measure.
Delete.im is only really meant to stop things from sitting in your email / chat history. Passwords, codes and things like that. You usually send those to people you know.
Could you not add a feature so it scrambles on screen text as its typed? So that screen shots would be useless?
Well, one could always take a picture of the screen. I guess that, once an image is displayed, it can always be captured by some means.
You must have miss-understood, what every the user types on the keyboard is NOT displayed on the textbox(screen) but instead a scrambled version displays.