Hitting the correct keys create muscle memory and so does hitting the wrong keys. For that reason mistakes should be corrected immediately to forget that wrong information in your brain as quickly as possible. But here's a problem. What I noticed with deleting in per letter basis is that it does a poor job in fixing your wrong muscle memory of that mistyped word. In effect I keep on repeating the same typos when that word appears again even though I always corrected them. The reason behind this is that our subconscious mind think by word or syllables instead of single letters. The simple solution is to allow CTRL+backspace to delete the entire word.
I hope you find my suggestion significant.