There is a possible fix upstream in the 0.26 version :
http://git.gnome.org/browse/vte/commit/?h=vte-0-26&id=0574bcfbd5c5925458ecdea0e6bbac6d65e30efc
I'm preparing a package with the patch to be able to test the fix.
** Also affects: lxterminal (Ubuntu)
Importance: Undecided
Status: New
** Also affects: vte (Ubuntu)
Importance: Undecided
Status: New
** Changed in: lxterminal (Ubuntu)
Status: New => Triaged
** Changed in: vte (Ubuntu)
Status: New => Triaged
** Changed in: vte (Ubuntu)
Importance: Undecided => Low
** Changed in: lxterminal (Ubuntu)
Importance: Undecided => Low
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Embedded Terminal Emulator isn't giving a TERM variable
https://bugs.launchpad.net/bugs/621927
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