#Vim, 39, 34 keystrokes

:se ri
Y:s/./<C-r>"/g
<C-o>qqgJC<C-r>"<esc>gJ@qq@q

5 bytes saved thanks to @Lynn!

Here is a gif of it happening live: (Note that this gif is of a previous version since I haven't had time to re-record it yet).

And here is an explanation of how it works:

:se ri                  "Turn 'reverse indent' on.
Y                       "Yank this line
:s/./<C-r>"/g           "Replace every character on this line with the register
                        "We just yanked followed by a newline
<C-o>                   "Jump to our previous location
     qq                 "Start recording in register 'q'
       gJ               "Join these two lines
         C              "Delete this line, and enter insert mode
          <C-r>"<esc>   "Paste the line we just deleted backwards 
gJ                      "Join these two lines
  @q                    "Call macro 'q'. This will run until we hit the bottom of the buffer.
    q                   "Stop recording.
     @q                 "Start our recursive macro

On a side note, Y grabs an extra newline, which is usually an obnoxious feature. This is probably the first ever time that it has actually saved several bytes!

Vim, 39, 34 keystrokes

:se ri
Y:s/./<C-r>"/g
<C-o>qqgJC<C-r>"<esc>gJ@qq@q

5 bytes saved thanks to @Lynn!

Here is a gif of it happening live: (Note that this gif is of a previous version since I haven't had time to re-record it yet).

And here is an explanation of how it works:

:se ri                  "Turn 'reverse indent' on.
Y                       "Yank this line
:s/./<C-r>"/g           "Replace every character on this line with the register
                        "We just yanked followed by a newline
<C-o>                   "Jump to our previous location
     qq                 "Start recording in register 'q'
       gJ               "Join these two lines
         C              "Delete this line, and enter insert mode
          <C-r>"<esc>   "Paste the line we just deleted backwards 
gJ                      "Join these two lines
  @q                    "Call macro 'q'. This will run until we hit the bottom of the buffer.
    q                   "Stop recording.
     @q                 "Start our recursive macro

On a side note, Y grabs an extra newline, which is usually an obnoxious feature. This is probably the first ever time that it has actually saved several bytes!

#Vim, 39 keystrokes

:se ri
Y:s/./<C-r>"/g
<C-o>qqjC<C-r>"<esc>j@qq@q:%s/\n<cr>

Here is a gif of it happening live:

And here is an explanation of how it works:

:se ri                  "Turn 'reverse indent' on.
Y                       "Yank this line
:s/./<C-r>"/g           "Replace every character on this line with the register
                        "We just yanked followed by a newline
<C-o>                   "Jump to our previous location
     qq                 "Start recording in register 'q'
       j                "Move down one line
        C               "Delete this line, and enter insert mode
         <C-r>"<esc>    "Paster the line we just deleted backwards 
                        "(That's why we turned on 'reverse indent')
j                       "Move down one line
 @q                     "Call macro 'q'. This will run until we hit the bottom of the buffer.
   q                    "Stop recording.
    @q                  "Start our recursive macro
      :%s/\n<cr>        "Remove every new

On a side note, Y grabs an extra newline, which is usually an obnoxious feature. This is probably the first ever time that it has actually saved several bytes!

#Vim, 39, 34 keystrokes

:se ri
Y:s/./<C-r>"/g
<C-o>qqgJC<C-r>"<esc>gJ@qq@q

5 bytes saved thanks to @Lynn!

Here is a gif of it happening live: (Note that this gif is of a previous version since I haven't had time to re-record it yet).

And here is an explanation of how it works:

:se ri                  "Turn 'reverse indent' on.
Y                       "Yank this line
:s/./<C-r>"/g           "Replace every character on this line with the register
                        "We just yanked followed by a newline
<C-o>                   "Jump to our previous location
     qq                 "Start recording in register 'q'
       gJ               "Join these two lines
         C              "Delete this line, and enter insert mode
          <C-r>"<esc>   "Paste the line we just deleted backwards 
gJ                      "Join these two lines
  @q                    "Call macro 'q'. This will run until we hit the bottom of the buffer.
    q                   "Stop recording.
     @q                 "Start our recursive macro

On a side note, Y grabs an extra newline, which is usually an obnoxious feature. This is probably the first ever time that it has actually saved several bytes!

#Vim, 39 keystrokes

:se ri
Y:s/./<C-r>"/g
<C-o>qqjC<C-r>"<esc>j@qq@q:%s/\n<cr>

Explanation/gif to come in a minute

#Vim, 39 keystrokes

:se ri
Y:s/./<C-r>"/g
<C-o>qqjC<C-r>"<esc>j@qq@q:%s/\n<cr>

Here is a gif of it happening live:

And here is an explanation of how it works:

:se ri                  "Turn 'reverse indent' on.
Y                       "Yank this line
:s/./<C-r>"/g           "Replace every character on this line with the register
                        "We just yanked followed by a newline
<C-o>                   "Jump to our previous location
     qq                 "Start recording in register 'q'
       j                "Move down one line
        C               "Delete this line, and enter insert mode
         <C-r>"<esc>    "Paster the line we just deleted backwards 
                        "(That's why we turned on 'reverse indent')
j                       "Move down one line
 @q                     "Call macro 'q'. This will run until we hit the bottom of the buffer.
   q                    "Stop recording.
    @q                  "Start our recursive macro
      :%s/\n<cr>        "Remove every new

On a side note, Y grabs an extra newline, which is usually an obnoxious feature. This is probably the first ever time that it has actually saved several bytes!