I've read in Elements that the dotless i is actually a Turkish character and also used with floating accents. Is it fair game to use it as a sort of alternate in words like "With" where a tightly kerned Wi may cause problems with the dot?
Certainly! Particularly in display typography. Also, when I dislike a font's dot, such as ITC Johnston's diamond, I just command-shift-b that sucker. YEAH!
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