Comment 2 for bug 519358

This bug is more general than the submitter believes. Using grub-pc 1.98-1ubuntu1 on Karmic x86_64, prior to graphics mode change and the display of the boot menu, grub outputs 2 error lines:
  error: unknown command 'terminal'

The indicated workaround does not resolve the issue. I believe this is *not* because the command is being executed, but because a scan/parse of the config file identifies unknown commands. Although the offending statements are in the default /etc/grub.d/00_header file, upstream should fix this in source.

An appropriate upstream fix would be to implement the terminal command as an error echo to use terminal_{input,output} instead.