Summary
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OSC sequences that you don't handle should be swallowed up silently (everything between OSC and ST should be eaten up). Currently, Gnome terminal/VTE prints everything from the opening escape to the terminator to the display.

Why this is a problem
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Some terminals support OSC sequences that VTE does not. For example, FinalTerm and iTerm2 have added support for OSC sequences of their own (e.g., OSC 133 and OSC 1337). xterm supports various OSC sequences that vte does not (e.g., OSC 5, OSC 51, OSC 52, OSC 105). In the future, VTE may add support for additional OSC sequences. This is a chance for improved forward compatibility for users who use more than one version.

I've received complaints from users who use iTerm2 at home and Gnome terminal at work because they need to customize their rc scripts so Gnome terminal won't output garbage at their prompt (the forthcoming beta version of iTerm2 relies heavily on these codes).

Example user issue: https://code.google.com/p/iterm2/issues/detail?id=3414


Example
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As it stands, a sequence like

OSC 1337;foo ST

will print the sequence, including an ugly glyph for u001b.


What do other terminals do?
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Other terminals, such as xterm and Terminal.app on OS X, ignore unrecognized OSC sequences. This allows such unsupported codes to be silently ignored on terminals that do not support them.