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If you are using System 7 on a MacPlus or an upgraded Mac512, you need to do the following in order for the Option key to work like a Control key:
Drag the file “ZTerm Keyboard” onto your System file. This will copy ZTerm's customized keyboard mapping to the System so that ZTerm can use it. Because this is a modified version of the US mapping, it may not be useful to international users. You can instead use the new option in Terminal Preferences to use the Command key as a Control key.