This looks a little bit way too much complicated to me.
Why do not you just create a cursor instead drawing into TreeCtrl? Alternatively, if cursor would be too big, you can always drag small popup window in your local loop.
ViewDraw is reserved just for the most special situations...
Mirek
P.S.: Now I seriously see that sooner D&D is finalized, the better. We have been hesitating for too long.