Is it even possible to run matchbox keyboard in xephyr?

This was causing me pain:

(nothing)

So I tried to xephyr things up. The run script here does all the messy parameters that I don't want to type into the command line.

I could add a picture of a black screen to show the lack of activity this induces.

On second thoughts I seem to remember twobob implying matchbox-kb could be used from xephyr... but how? I have no ideas as to why the above doesn't work and how it could be made to.