iTerm is a fantastic application overall but it has one deal breaker. I have gotten way too used to Terminal.app's "option click to position cursor" (Window Settings > Emulation), which allows me to optionclick (alt click) somewhere on a line of text or in a program like nano and terminal will automatically emulate pressing the appropriate arrow keys to get to that position. This makes for very quick editing or command correction.
This feature is something i would consider the only thing holding back iTerm from being the main terminal application for a lot of users like myself. please add it!
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Though that's a nice universal trick, you can get proper mouse support in many apps, nano included. If you start Nano with a -m switch (or enable it in /etc/nanorc), you can not only click to position the cursor, but also drag to make selections, click on commands etc (no drag & drop though ;*)). Other apps have mouse support built-in too, such as elinks.
Something I find slightly annoying is that once you've enabled it, you lose normal mouse behaviour - for example you can't select text in nano to copy to the Mac clipboard. Dang - and I've just figured out that you can work around that: just hold down option while dragging!
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We used to have option-click to position the cursor. Now it's gone. We have xterm mouse support as coolbru mentioned. You can do this in vi, emacs, nano, etc. We have option key as a way to escape the xterm mouse support. I think that should be good enough.