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Start the app and set the keyboard to remote keyboard. Enter the ip address+port in the app into putty and put it on telnet mode. It should launch a command prompt window where anything you type in it goes to phone instead.
Update: I got the issue again with a different keyboard app (no physical keyboard). Seems Sesame Shortcuts just doesn't like when there's too much vertical space. The app I'm using now is Remote Keyboard.
With that in mind, I went back to Hacker's Keyboard and turned the keyboard height way down. I got the same bug. I was able to experiment with different heights and find the breaking point.
With my phone (Nexus 5X), Sesame Shortcuts will only work if the keyboard takes up more than 16% of the screen.
There does not seem to be a breaking point on the other end - HK lets you set a size anywhere from 15% to 75%, and it works at 75% (though the button is hidden under the keyboard itself at that point).
Edit: Also, normally, you can tap in the grey space (where there are no icons) to cancel the shortcut invocation. If this bug occurs, you can't do that. The system back button still works however.
I actually wrote an app for exactly this purpose: remote keyboard