Vi-style text editing method for Android UI
Is something like this available somewhere? 


Not at the moment, although there are a couple vim-style text editor: 


Vim Touch
aVim Editor


however these are currently implemented as an application, not as an IME.


  What would it take to develop it? What places in Android must be modified? Is there some easy plugin framework where you just fill in some functions and you provide a new text editing method?


Android provides the framework for creating custom keyboard (officially known as IME). Anyone that is interested in creating a vim-style IME for Android should check out Creating Input Method.