You can also refer to this where you cn draw the shape of your custom cursor in Actionscript and apply...
Thank you all!
I ends up using a unicode character to represent the caret in the text area.
private const CARET:String = '\u2588';
And do all the handling on keyUp, mouse click, so that it follows the user pointer.
Thanks for all the suggestion! I hope there are other workarounds.
Flex 4 and Spark TextArea should allow for more customization of the cursor.