Your comments

What kind of file are you editing when this happens? 
Implemented in Textastic 4.0.2:

You can press return to accept the top-most entry.
Use the arrow keys on the external keyboard to select a different entry from the list. Hit return to accept the selected entry.
Use the left or right arrow keys to close the list.

For the on-screen keyboard nothing has changed.
Yes, Textastic has syntax highlighting for Java and a huge amount of other languages. Here's a list: http://www.textasticapp.com/v4/manual/lessons/Which_file_types_are_supported.html
Thanks. Similar buttons were already used in the apps "Heart Writer" and "FlickKey", so I can't really take credit for the original idea. But I've put a lot of thought in the arrangement of the keys in Textastic.
The right and left arrow idea sounds good. I'll try it out.