As of OS X 10.11 El Capitan, Terminal supports Mouse Reporting.
Note that programs that support Mouse Reporting must enable it via escape sequences, and that most programs that support Mouse Reporting must be configured to enable it. For example, in Vim you must execute
set mouse=a (usually in your
Terminal supports reporting three mouse buttons and a scroll wheel. To simulate a button-three press with a two-button device, you can use Command-Right-Click. (Command-Right-Click also performs Edit > Paste Selection when Mouse Reporting is off, so Middle-Click will paste the most-recently selected text whether you're using Mouse Reporting or not.)
When Mouse Reporting is enabled, the Option ⌥ modifier key is mapped to Meta for clicking and scrolling, and is unaffected by the “Use Option as Meta key” Keyboard preference, which only applies to keyboard input.
To temporarily bypass Mouse Reporting and interact with the terminal view, press the Fn modifier key while clicking or scrolling. There is also a View > Allow Mouse Reporting (⌘R) menu item you can use to bypass Mouse Reporting for longer periods of time, or if the modifier key isn't available.
Note that, when enabled, Mouse Reporting supersedes Terminal's existing Option-Click behavior (which sends arrow-key input to move the cursor) and “Scroll alternate screen” behavior. Also, the new Allow Mouse Reporting menu item and the Fn modifier also apply to “Scroll alternate screen” to let you temporarily bypass this behavior.