When using Exceed to connect to the linux box (using rexec and executing
backspace is not mapped correctly. This happens when connecting from other
systems (tested with IRIX and Solaris), too.
Can be solved by removing the line
<Key>Delete: string(0x1b) string("[3~") \n\
It is impossible to configure xterm to work with every possible piece
of software out there, and yet work with what it works with now. I
consider this problem a local configuration issue where the default
configuration is not what is needed for your particular case. The
proper solution IMHO is to reconfigure xterm as you have done. I don't
see this as a bug at all.