Background color and font color can be set in the osso-xterm preferences dialog. I don't recall whether or not vim syntax hilighting works. I know it does in my vim, because I compiled it on the N800. I have a deb that I threw together in the scratchbox environment, but I don't know how well it works. You can try it out here.

The tablets use busybox ash, not bash, as the shell. It works, but it doesn't include the plethora of features that bash provides. If you search around the forum, there is a thread that talks about bash, complete with a binary and instructions for installation.