Text terminal hardware (for Linux)

You might consider getting an old Toshiba Libretto laptop and set it up to run as a 3270 or a VT52/VT100 terminal with an emulator program. You can either run Putty on Windows, run a terminal over a serial cable or you could even load up a version of linux and ssh from one to the other across the network. The bonus is the old libretto models are all cheap now. You could put a pcmcia wireless card in this which would unchain you from the tty cord.

This is super easy to do as there are a ton of terminal emulators out there.

I did something along those lines where I had the libretto plugged into TTY type console via a null modem cable and then plugged it into the network. I could RDP to the Libretto which I left in a remote location that was not convenient for me to visit in person. I could still hit the console just like I was right there.

I think the cheapest solution is an old laptop or netbook and an ethernet cable. On the software side you would need ssh(d). Serial cable is also an option, but more complicated to set up, espescially if you need to buy a usb-serial adapter.

USB usually isn't used for the classic "dumb terminal" paradigm, although as Chris mentioned in his answer you could get a USB-serial adapter. The traditional terminal is old, CRT-based and large, and you want small.

Since your'e looking for small, try the Nokia N810 net tablet. My friend has discovered that he can use VNC with it to control his PC, you could just as easily use ssh or telnet to connect to your main PC. He's a DJ, and has a PC-controllable Yamaha mixer, and so will use the N810 to control his PC, which then controls his mixer... as your application would be far simpler, I would think it would be very doable. The N810 runs a modified version of Debian Linux, so you should be able to get a ssh client to run in its' terminal window (according to one forum post I found, it comes with a ssh client). Plus, you can do this wirelessly, which cuts down on the cordage. The cheaper Nokia N800 would also do this too.

Either that, or get a netbook, overwrite the OS with a Linux distribution that lets you use the commandline, and do the same thing.