What you see is that installing the $ TERM terminal in a / Vim shell session does not match what the EMACS terminal does. Mine works fine, except that the delete key is mapped to DEL, 0x127, and Vim wants ^ H, 0x8. Mine shows the value of $ TERM as an itherm color.
Check what you have as $ TERM
$ echo $ TERM
and check the Vim docs to fix the backspace problem.
source share