Maybe I'm being unfair here, but it sounds like your complicated system (involving bootstrap scripts, a remote conductor agent, and "hijacking" the terminal connection with special escape sequences for command communication) has a subtle bug. Can't say I'm surprised, complexity breeds this sort of thing, especially when using primitives in ways they weren't really intended to be used.

> iTerm2 accepts the SSH conductor protocol from terminal output that is not actually coming from a trusted, real conductor session. In other words, untrusted terminal output can impersonate the remote conductor.

If I understand correctly, if a textfile (or any other source of content being emitted to the screen, such as server response banners) contains the special codes iTerm2 and the remote conductor use to communicate, they'll be processed and acted upon without verifying they actually came from a trusted remove conductor. Please correct me if I'm mistaken.