You can extensively modify the look n feel of Terminal. Open a Terminal window, right click and select Window Settings. I agree with you, the defaults are horrible, but you can change pretty much EVERYTHING about how it looks, how large the window is, its default position and so on. Before you look for alternatives, you may wish to try this out.
By the way, I just checked out the iTerm page. It does look interesting, but it is a Cocoa application. That *usually* means that it is not all that speedy. Can anyone comment on how iTerm performs?