the env specified in the hterm preferences aren't communicated to the process started by Chrome:
chromium//src/chromeos/process_proxy/process_proxy.cc:
int ProcessProxy::LaunchProcess(const std::string& command, int slave_fd) {
  options.environ["TERM"] = "xterm";

we can't allow arbitrary env vars to be passed down as it would open up system attacks (like bash's "shellshock", or changing behavior of ls/grep, or stack overflows).  instead we should update the default settings to be a bit more modern:
- set TERM=xterm-256color
- set NCURSES_NO_UTF8_ACS=1 since we're changing the default encoding to utf8

the TERM change requires an update to the ncurses ebuild though ... currently we only ship "xterm" on the rootfs