SSH: Behavior of SetEnv for TERM variable

This thread on the openssh-unix-dev seems to indicate that TERM is indeed special, and you can't set it via SetEnv. Here's my reading of things:

As noted in that thread, when the SSH client requests a new PTY from sshd, the request includes an explicit TERM value (see RFC4254, "The Secure Shell (SSH) Connection Protocol", section 6.2). This is separate from any environment variables the client wishes to send.

In OpenSSH's ssh.c, function ssh_session2_setup, OpenSSH unconditionally reads the PTY request's TERM value from your current environment, without any regard to any SetEnv directives. (You can see environment variables, including those from SetEnv, being sent separately in clientloop.c, function client_session2_setup.)

Then, on the server side, session.c's do_setup_env function sets up the environment for the new shell in the reverse order from how the client sends it: first it sets environment variables from s->env, then it sets TERM from the PTY request's TERM value (s->term), overwriting any value for TERM sent as a normal environment variable.

Because of this order of operations on the server, a SetEnv TERM will always be overridden by the value of TERM in the ssh client's environment, not from any SetEnv.

There seem to be good arguments for changing the behavior of OpenSSH in this regard in the aforementioned thread, but I take it no action came of it. At least one person in that thread felt strongly that the remote host's init files should be the one to modify TERM if needed. (I disagree, personally.)