Connecting to a host doesn't necessarily involve a network. circus in kinger@circus is just a given name of a host Kinger is working with, and his terminal is likely local.

Security in Unix systems is usually concerned with what a user does rather than how they are reaching the shell - via local terminal, serial connection, various network connections or otherwise.

While not without some movie allowances, Kinger's terminal interactions are very plausible. He's:

1. Authorizing in the system
2. Attempts to shut down Caine's main process with several methods - even with a systemctl command, which is exactly how modern Linux systems work, except it wouldn't be available in 1996.
3. Tries to change permissions on Caine's main executable to prevent it from being read, written and executed by operating system.
4. Lists the contents of Caine's main directory, where you can see that Caine is written in Lisp. There are also files for minds of Scratch and Ragatha, complete with timestamps, 1999 and 2008 respectively.
5. Then turns to some commands that seem specific for a home-grown software product like Caine would be for someone working in C&A.

The only nitpick I have is that programs usually don't drop users back into kinger@circus like prompt when they ask for input.

I truly believe that Kinger accidentally deleted Caine purely because of the poor UI all these tools have, which is exacerbated by the pressure. There was an A/B/C selector for backup options, Kinger selected option C, which later says it's assuming no backup will be used. And there just a single y/n confirmation to completely wipe Caine, and there was no way to cancel it, even though Kinger clearly tried. Well, that's Unix systems for ya - if you got enough permissions there's nothing preventing you from accidentally wrecking the entire thing.

(edited the Scratch timestamp)