Thanks for the comprehensive explanation. What I ended up doing, which
seems to have fixed it, is set my terminal app's terminal type to
"xterm" (iTerm: Bookmarks -> Manage Profiles -> Terminal Profiles ->
Default -> Type -> xterm, then close/re-open all terminal windows).

That aside, this ticket can be closed. As I understand from what you've
written, the dropped input was due to me setting TERM=screen.

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A subset of input keys temporarily stop working
https://bugs.launchpad.net/bugs/349636
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