Yeah who wouldn't love a dip in the sulphur pool. But back to the question, why can't such a model recognize letters as such? It cannot be trained to pay special attention to characters? How come it can print an anatomically correct eye but not differentiate between P and Z?

I think the model has not decided if it should print a P or a Z, so you end up with something halfway between the two.

It's a side effect of the entire model being differentiable - there is always some halfway point.