There is a solution to this, that I have noticed in another crossword app (made by the Swedish broadcasting company, actually). When you click a box, the app will highlight the horizonal row of boxes. If you click the same box again, the app will hightlight the vertical row of boxes. (And if you click it again, it will start over from step 1.) When you start writing, it will enter letters from the box you clicked and further on to the right/bottom.

Scribble comes with support for English and Chineese. Apparently Apple feels that is enough to release the functionality, at least for now.

OCR (optical character recognition) has been around for 50 years and is pretty much the same thing: Catch a pixel representation of a written text and let a computer interpret it to letters and digits. I'm actually surprised that Apple has the guts to release the feature with support for only two languages, since it made me call the Apple Store for a return of the iPencil I had purchased.