I've got a vte terminal embedded in a GtkPaned (part of the anjuta2 project). After resizing the terminal by dragging the GtkPaned, the vte widget no longer accepts any keyboard input. It just sits there and doesn't respond to anything: doesn't display any of the characters i'm typing, doesn't respond to "reset", "clear" or "exit". Resizing works fine in gnome-terminal. Filing this @ bugzilla.redhat.com because of limbo.
It now works with vte-0.7.0 from rawhide. There's still some garbage text which doesn't get cleared when you make the vte widget smaller (the space below the last line in the vte widget which is smaller than the height of a line doesn't get cleared).
The hints on the widget shouldn't let you resize it to a non-integral multiple of the character cell size. The widget didn't set this geometry hint in the past, but it should be fixed around 0.7.3 or so. Closing.