Sorry, I'm so behind on responding to issues/PRs...
First of all, wow! I didn't know anyone had gotten this to run on Windows, including via WSL, at all.
Second I think I know what the cause is... this should have sent a signal saying "hey, hide the cursor" that for whatever reason WSL doesn't know how to interpret I'd assume?
What I could do is move the cursor to the bottom-right of the screen. That'd probably at least not fix the problem but might make it not-annoying? What do you think of that?
To be honest I do not use Alacritty nor WSL anymore due to the fact that I switched completely to Linux and am happy enough with KDE's Konsole. Since I am not very experienced in programming larger applications I also think I am the wrong person to ask. From a User-Perspective I would be okay with it, however if it covers a deeper problem within Alacritty or WSL it might still be the wrong thing to do. Sorry for being of so little help.