CRLF injection vulnerability in xterm allows user-assisted attackers to execute arbitrary commands via LF (aka \n) characters surrounding a command name within a Device Control Request Status String (DECRQSS) escape sequence in a text file.
DECRQSS Device Control Request Status String "DCS $ q" simply echoes (responds with) invalid commands. For example, perl -e 'print "\eP\$q\nbad-command\n\e\\"' would run bad-command.
Exploitability is the same as for the "window title reporting" issue in DSA-380: include the DCS string in an email message to the victim, or arrange to have it in syslog to be viewed by root.