;; I finally found it!  This makes emacs backspace work in every environment, even
;; Mac OS X in a shell.  
;; Thanks to Morgan McGuire matrix@graphics3d.com
;;                          http://graphics3d.com/guides/emacs/index.html

;; Add this to your .emacs:
(setq term-setup-hook
      '(lambda()
         (setq keyboard-translate-table "\C-@\C-a\C-b\C-c\C-d\C-e\C-f\C-g\C-?")
         (global-set-key "\M-h" 'help-for-help)))