I'd use something like https://pypi.python.org/pypi/blessings/ which lets you set up a terminal with a cursor.
You can move the cursor "up" when you want to print output from the other connection and then move it back down when you want to get input.
If you want to get crazy you can do all that magic by yourself with terminal control commands (on windows you'll need colorama) which will let you do things like:
print("\033[6;3HHello")
Which moves the cursor to x,y. This requires an ansi terminal.