The problem of making a proportional font terminal that uses proportional fonts when a user would want proportional fonts and still lines up ls and ASCII art is considered to be AI-hard. Making a terminal that JUST uses a proportional font (and maybe lets the user switch between proportional and fixed-width) is not AI-hard.

I have a hacked fork of Ajaxterm that works by forcing a proportional font on Ajaxterm's PRE block; Ajaxterm no longer works with Firefox and I believe it has never worked on Chrome, but if you're doing cross-browser testing and have IE6/7/8 working, or for instance if you have Firefox 2, you can use the terminal at http://jonathanscorner.com/terminal/

I invite you to read what is said about typography and terminals at http://jonathanscorner.com/terminal/. The Unix terminal is the last major holdout I'm aware of in the computer world where usability-optimized proportional fonts are not available (and if you insist on using Verdana, the terminal gives every character the width of the widest character, nerfing the proportional aspect of the font).

When my terminal was only working with IE, I found myself for the first and only time using IE as my primary browser--the terminal was valuable enough to serve as a killer app for using IE.

I don't use it now because the implementation has latency of something like a second for a keystroke, and that gets painful quickly. However, I do offer http://jonathanscorner.com/terminal/ as a reference implementation of something I think gnome-terminal can do better, by far.

Thanks,
Jonathan