I made this modern-looking icon for iTerm ages ago, but never thought to submit it.
It's modelled after the Terminal.app icon, but I think it's distinct enough to avoid confusion.
The old iTerm icon has not changed through several OS updates, and it looks very dated now. Version 1.0 - time for a fresh icon?
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Replacement icon, 512x512
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The time has come! iTerm2 will use this icon. http://code.google.com/p/iterm2