When variable term-scroll-show-maximum-output is set to t this can result in a blank line at the bottom of the buffer.
This breaks programs such as less which won't display the top line.
I can't see the purpose for the new-line. The following patch removes it.
=== modified file 'lisp/term.el'
--- lisp/term.el 2012-01-26 02:32:56 +0000
+++ lisp/term.el 2012-04-04 05:26:53 +0000
@@ -3751,7 +3751,6 @@
;; extra space when wrapped is false.
(when wrapped
(insert ? ))
- (insert ?\n)
(put-text-property saved-point (point) 'face 'default)
(goto-char saved-point))))