Alright, let me be even more specific, although this is alluded to in my previous answer.
You can combine a cursor into a character, by simply making the cursor the background colour. The tile changing it's background colour from green to black under the '@' which is present there, is a fairly common way of doing a cursor. You don't even need to change the background colour, you can modify it by some factor which makes it obvious it's cursorified. And the same approach can be done for selection of regions via highlighting.
If you wish to do layering and have a special cursor character, then download the tile engine and do what it does.