This is not possible as far as I know.
The whole idea of telnet was that you could control the remote computer as if you were sat in font of it. When your sat in front of the computer you can generally 'wander' all over the system and have look around, permissions allowing.
Ssh works for most people the same as telnet but any data transmitted is encrypted.
On most unix systems that I know you can look at quite a few config files (such as those in /etc) but you can't edit them.
A normal user needs to be able to read and see quite a lot of files to actually be able to run, trying to keep them in their home directory will actuallt stop them doing any work.
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P.S. These are my own comments and while I think they are accurate they may not be. Any one care to comment?