Roger,
I took Terminal.py and copied it into Lib/idlelib for the 3.4 branch. The extension started just fine but when I toggle it off under the options menu the arrow keys still go through history. Basically on my Mac I see no difference between the extension being turned on/off when I use Terminal.py from idle-X version 1.11.2. I am not sure why when I toggle the extension off I can't move around the shell window with my cursor keys like the original patch allowed me to do. Hopefully this helps. Thanks.